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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: j g cordes who wrote (16616)	6/17/1998 12:58:00 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69208

Canadian Financial Post Wednesday, June 17, 1998 Greenspan admits to being awed by merger frenzy By PETER MORTON Washington Bureau Chief The Financial Post ÿEven U.S. Federal Reserve Board chairman Alan Greenspan admits he is overwhelmed by the megamerger frenzy sweeping the U.S.ÿGreenspan, who holds the throttle on the booming U.S. economy, said yesterday it was too early to tell what the impact of the fifth major period of corporate consolidation since 1900 will ultimately have. ÿ"I think we're awed by the huge size of these conglomerates," he told a congressional committee. "And it's very difficult for people to adjust, including economists, to the continuous altered scale of things." ÿTwo Canadian companies, Northern Telecom Ltd. and Teleglobe Inc., are the latest to jump into the merger frenzy with their planned takeovers of U.S. telecommunications companies. ÿGreenspan told the Senate judiciary committee Congress should not move in to regulate the merger frenzy until it becomes clearer what the impact on the U.S. economy will be. ÿ"The United States is currently experiencing its fifth major corporate consolidation of this century ," he said. "When trying to understand and react to this development, I would hope that we appropriately account for the complexity and dynamism of modern free markets." ÿBut he was not convinced the U.S. regulatory environment can readily cope with the scale of the mergers, many carrying price tags into multiple billions of dollars. ÿ"I don't think we fully can," he said. "I can't . I mean, these numbers are awesomely large." ÿUnlike previous merger waves -- in the 1900s, the 1920s, the late 1960s and the last in the late 1980s -- this wave of mergers is unlikely to produce a concentration in manufacturing, Greenspan said. ÿThe U.S. Federal Trade Commission and the U.S. Justice Department have been keeping a close eye on the recent U.S. and foreign mergers because of concerns competition is being sharply reduced. ÿ"The effects of the present merger wave on concentration have yet to be determined, but there is little reason to expect their influence will differ substantially from the merger wave of the 1980s which produced, at the most, a slight increase in manufacturing concentration," Greenspan said.E ÿInstead, much of the merger activity in the 1990s has been in the U.S. banking sector that is finding it easier to consolidate now that Congress has lifted many of the restrictions against interstate banking. ÿThe Fed chairman emphasized, however, he is still against seeing banks moving into insurance and other non-financial areas as they attempt to restructure as financial holding companies. ÿ"Let's see how they behave," he said, adding he believes such a move is inevitable. ÿSo far, there has been little impact on the network of thousands of small local banks in the U.S. because the mergers have been among regional banks. ÿ"Even when the merger is among competitors, increasing global competition or domestic entry could be simultaneously reducing concentration." ÿThe telecommunications sector is also open to an increasing number of mergers because such new laws as the 1996 Telecommunications Act have deregulated the industry. ÿ