Question of Competition

In an unprecedented application of the Clayton Act, Federal District Judge Warren J. Ferguson last week ordered the Times Mirror Co., publisher of the Los Angeles Times, to divest itself of the San Bernardino Sun and Telegram, a pair of papers it acquired in 1964 for $15 million. San Bernardino is 60 miles east of Los Angeles, and the company contended that its acquisition of the two papers did not change the journalistic situation in that area because there never had been much competition between the Times and the San Bernardino papers. But the judge took a different tack.

"The fact that two merging companies presently compete or do not compete is not the significant issue," said Ferguson in a 36-page opinion that ended trial of a suit brought by the Justice Department in 1965. The question, he said, was whether the merger tended to discourage future competition. "Congress has directed," he said, "that if its effect is anticompetitive, then there is a violation." It was the judge's contention that the acquisition prevented any other newspaper from coming into San Bernardino County in the future. "The evidence discloses that the San Bernardino County market has now been closed tight and no publisher will risk the expense of unilaterally starting a new daily newspaper there.

"The acquisition was particularly anticompetitive," he went on, "because it eliminated one of the few independent papers that had been able to operate successfully in the morning and Sunday fields." Nevertheless, the judge turned down the Justice Department's request for a permanent injunction against further acquisitions by the Times in San Bernardino. There are a few other small dailies published in the county; if one of them were failing, said Ferguson, its purchase by the Times might help preserve competition, not eliminate it.

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