Alcan merger woes spawn call for global competition agency

By Staff -- Purchasing, 2/8/2001

The growing wave of cross-border mega-mergers makes it imperative to create a new agency devoted purely to coordinating global antitrust policies, suggests Joel Klein, assistant U.S. attorney general for competition. The Justice Department official says "the time has come to set up a new body, modeled on the Organization for Economic Cooperation and Development, to draw up ground rules for vetting mergers."

Some 80 nations worldwide now impose some form of antitrust authority over mergers. The size and complexity of recent mergers means they are often caught up in a mire of vastly different review procedures with quite different deadlines, making it hard for firms to know with any certainty when they can complete their deals. Alcan Aluminium, for example, had to file 16 separate notifications of its planned merger with Alusuisse, and Pechiney spent $100,000 in filing fees and had to present its case in eight different languages. When the three-way merger fell apart because of European Union objections, the Alcan-Alusuisse marriage proceeded weeks after schedule and at legal costs the company will only describe as "substantial."

"Multi-jurisdictional mergers are complex and expensive, because of substantive and time differences between jurisdictions," says Klein. "A multiplicity of agencies no longer makes economic sense." He adds that "the time has come for a global organization committed to these issues" because "major global organizations need to start exploring a global initiative for competition policy.'' He also agrees with industry insiders that "merger reviews have to be done in real time because timetables matter to businesses."

Klein suggests such international bodies as the World Trade Organization, World Bank, the United Nations Conference on Trade and Development and the OECD , as well as national competition authorities, need to begin work toward establishing a new agency. His vision is that such a body could and should never become a global regulator, but would rather attempt to set common standards for the growing number of competition agencies to follow and advise how different jurisdictions could dovetail the length of their review procedures.