Gate opens for steel mergers
BY agreeing to sell two steel facilities, LTV Corporation and Republic Steel Corporation have now opened the way for a merger. The proposed linkup should strengthen the ability of the firms to compete with overseas as well as domestic steel producers.
The scaled-down merger proposal has been given a tentative approval by the US Justice Department. The department had rejected a merger plan between the same firms a month ago on the grounds that the combination would result in an ''unacceptably high'' concentration in a number of areas of steel production. Analysts are noting that the revised plan would go far toward preventing such a concentration. Thus, there seems no reason why the consolidation should not go ahead as planned.
As noted by J. Paul McGrath, who heads the antitrust division of the Justice Department, the original merger proposal of LTV and Republic, ''together with the (then) pending proposed merger of US Steel and National Steel, would have resulted in two companies having almost half of the US carbon and alloy sheet business.'' Also, the LTV-Republic linkup would have given the combined firm about 50 percent of the stainless steel market in the United States.
Since Feb. 15, when the Justice Department indicated its disapproval of the LTV-Republic linkup, the proposed US Steel-National Steel merger has been canceled. Also, as argued by the Justice Department, the sale of two plants by Republic will avert any increase in concentration in cold-rolled stainless steel and carbon and alloy sheet steel.
On its face, the new merger plan appears to differ from the earlier proposal. Congress, of course, is expected to review the extent to which that is the case, in light of the criticism of the original Feb. 15 Justice Department rejection that came from top administration officials.
Each merger proposal should be examined on its merits.
Congress seems to be increasingly recognizing just such a principle, underscored by the redrafting this week of legislation that would have halted all oil company mergers for six months. The bill is now being refashioned so that currently proposed mergers would be allowed to go forward, although the mergers would still require formal federal antitrust approval.
