would be brought only after the regulatory agency has concluded its procedure. Plus, I think there was a feeling that, first of all, we had both parties more prepared to go to litigation, and thus the prospect of that long a delay was perhaps not as real there as in the other kind of circumstance.

Mr. MAZZOLI. Mr. Kauper, I appreciate that. Now, your three recommendations at the end of your statement, then, for the CID bill, and for the premerger notification bill, and for the extension, or the elimination of the interstate commerce impediment-if they were granted by this Congress, would they give you the tools you needed, even though you would not have an automatic stay?

Mr. KAUPER. I don't think anyone can say that in a given case it gives us everything that could be utilized, but it certainly goes an awful long way in that direction. I think the premerger notification requirement does give us a far better opportunity to get in the court and seek a preliminary injunction.

Mr. MAZZOLI. Perhaps you might inform me, is there any time period that you prefer for prenotification?

Mr. KAUPER. I think the position we have taken is that the initial 30day period is fine. Our concern has been with the extension authority, and I think the judgment that was made-and indeed, I think that is reflected in the letter which Judge Tyler sent to the Senate committeewas a 20-day extension if we asked for information, requiring them to hold up for 20 days thereafter. That is, an extension for 20 days after we get the information, was thought sufficient.

Mr. MAZZOLI. That would be a total of 50 days, is that correct?
Mr. KAUPER. Yes.

Mr. MAZZOLI. Thirty-day notification, and they are entitled to request one 20-day extension."

Mr. KAUPER. Yes.

Mr. MAZZOLI. And if I'm correct-I'm new to this subject-during that period of time you have to make your judgment based upon the evidence and investigation of whether or not to seek a preliminary injunction; is that correct?

Mr. KAUPER. That's correct.

Mr. MAZZOLI. And if you fail to seek it and the merger goes through, as you mentioned before, to then unscramble eggs is an impossible task for the most part.

Mr. KAUPER. Yes.

Mr. MAZZOLI. Now, is there any way to estimate for this committee what the percentage of success would be if you had these three additional tools, in the number of mergers that you would want to try to unscramble, as against the ones you now would have?

Mr. KAUPER. Well, I don't have much doubt that there would be more cases in which we would effectively get preliminary relief. Now, as to how many, that is pretty hard to say. I don't know how to quantify that number, but I think we would be more able to get it.

The problem in getting preliminary relief is frequently a time problem. You have to be prepared to be in court, and you not only have to make the decision, but you have to have your data in a form in which it is in fact presentable to a Federal district court, and that takes some time.

Mr. MAZZOLI. Mr. Kauper, you talk about a substantial company as being one that would give premerger notification. Would you be able to tell us what you mean by "substantial"? Perhaps you have already mentioned it this morning.

Mr. KAUPER. The attempt is made in premerger provisions in title V of S. 1284 to do that in terms-and now I'm only talking about what companies would have to report-in terms of the dollars, either assets or sales. I believe the figure now in the bill is $100 million in the acquiring company, and $10 million in the acquired company; or, if you can conceive of the pygmy swallowing the elephant, the other way around.

I think that is probably as good a way to try to define the circumstances where this would be particularly helpful, and where there might really be a major economic impact.

Mr. MAZZOLI. Would you have any idea about how many that would be? You said that in the period from 1960 there have been 6,716 investigations.

Mr. KAUPER. We have run a check on those jurisdictional limits over the past 3 years; it would have gone slightly under 60 in each year. Mr. MAZZOLI. Under 60, slightly under 60 in each year?

Mr. KAUPER. Yes.

Mr. MAZZOLI. And then, for any companies that don't fit within those guidelines, you would glean this information from reading the journals?

Mr. KAUPER. Presumably, as we normally do; yes.

Mr. MAZZOLI. And you feel if you had that authority, that would solve the problem, or at least help you?

Mr. KAUPER. It would certainly go a considerable way. One of the things you have to keep in mind, that it is the bigger mergers that tend, in terms of analysis, to be the more complex, and require more by way of analysis. The smaller merger may be a significant merger, that is, there may be significant mergers well under those guidelines, for example, in a rapidly developing industry, firms may still be of a relatively small size; but looking down the road, you can see that this is going to become a major industry.

But, I think in terms of analysis-and that is one of the reasons we are talking in terms of a time period-it's the bigger mergers that are more complex, take more time, more resources, may involve a good many more markets, and an analysis has to be made. So, I think by focusing on the larger mergers does mean that kind of problem.

Mr. MAZZOLI. Those are the ones you direct most of your resources to, anyway, I would imagine.

Mr. KAUPER. Oh, I think that's certainly true. Now, we do file occasionally against some smaller mergers, but in terms of our own resources, they are probably commensurate with the size of the merger. Mr. MAZZOLI. I would like to ask one last question, and that deals with the kind of cooperation that you get from companies. As I understand the situation, now a days, where you have a limitation on time, since a lot of times your notice comes via these indirect sources, do you generally get reasonable cooperation from most companies, to give you the data that you need to develop a judgment on whether or not to proceed with a suit?

Mr. KAUPER. Well, I don't know that I would put it one way or the other in terms of "most." We certainly do get cooperation from a number of companies. There are companies which as a matter of policy would inform us at the time of any kind of agreement, perhaps even before that. Others would probably go out of their way not to, Some companies, if we feel that we do not have sufficient information and we request them simply to delay consummation, may do so. Others clearly would not do so. Those that do so, I suspect, simply do so and indeed, if I were on the other side, I don't know what I would do-but I suspect because of the fear that we might make a judgment based on limited information, and that would not be in their own interest.

Mr. MAZZOLI. Thank you very much, Mr. Kauper, and Mr. Chairman. Mr. FLOWERS. Thank you, Mr. Mazzoli. Mr. Hughes?

Mr. HUGHES. Thank you, Mr. Chairman.

Mr. Kauper, in the area of divestiture, one of the arguments that I have seen often used by companies after the fact is that. "They are now prejudiced, and that you should have warned them before the merger took place."

Can you tell us whether or not this particular defense is advanced in many of the divestiture cases you have dealt with?

Mr. KAUPER. NO; I don't think that's a very common kind of argument. That's an argument that is sometimes made to me in my office by counsel, as to why we should not now file suit.

Frequently, I must say, in cases where they have not advised us in advance that they were merging, that is the argument, but I don't think it is very commonly made in court. It may be made in the setting of what is to be divested, that is, if a merger occurred, let us suppose, 2 years ago, and I file suit today and win on the substantive part of the complaint, there may be some argument as to what assets should be divested; should we, for example, obtain the benefit of improvements they may have made; should we now be seeking to divest what existed at the time we filed the complaint, as opposed to when the merger took place, that kind of argument may be made. But I think in the broader sense in which you made it, no.

Mr. HUGHES. So that when prejudice is argued, that is not commonly one of the aspects of prejudice that's either briefed or argued.

Mr. KAUPER. No; I don't think so.

Mr. HUGHES. You have made three recommendations in your testimony, and I wonder if you have given any thought to what additional staff, if any, would be required to implement the discovery powers, and other authority contemplated by this legislation.

Mr. KAUPER. We discussed some of those questions in the hearing here last week, on the authorization bill which has been proposed for the Antitrust Division.

I think insofar as the specific items which we have recommended in this testimony, with the possible exception of the commerce requirement amendment, I see nothing there that should require additional resources in these proposals. Indeed, it would be my hope that the opposite would occur, that is, if we had more effective tools, we would be able to utilize less by way of manpower resources.

Now, it is possible that if there were to be expansions in the interstate commerce requirement, that that would get us into some kinds of mergers which today just pass by the board, and thus might require

some additional resources. But I think the other provisions would not. Mr. HUGHES. Obviously, you have a great deal of difficulty in getting the information that's required in sufficient time to make the kind of value judgment that you have to make, either to file for preliminary injunction, or whether to take any position.

I wonder how much assistance you receive from the other regulatory agencies that do collect data with reference to mergers?

Mr. KAUPER. Well, let me distinguish two things. First, where we are involved before one of the economic regulatory agencies, that is that agency, for example, let's take airlines, if you like, will collect a great deal of data over a period of many years that is useful. But, the form in which we would be involved in that regulated industry would be the CAB to begin with, that's where we would be litigating by virtue of the fact that they have immunity granting authority. So, while we could perhaps get the information from the CAB, it would be in connection with their own proceedings. There are not that many agencies that collect specific market data, outside the economic regulatory area, where we would probably not be in district court anyway. Now, in some circumstances, for example, there may be data we might want in connection with certain kinds of food acquisitions, and some of that we may be able to obtain from the Agriculture Department, from a variety of places. But in making a judgment in connection with a merger where you need really very specific market data, in most American industries that data is not collected by any other government agency.

Mr. HUGHES. Let me just single out the area of bank mergers and bank holding company acquisitions. Aren't those reports available, usually. much in advance of the 30 days?

Mr. KAUPER. Sure, in fact, we will go through the entire regulatory process before that 30-day judgment has to be made.

Mr. HUGHES. One of the things that S. 1284 addresses is the problem of probable illegality, and under present law, as I understand it, the Government has to establish that there is probable illegality, that there will be success on the merits, and second of all, that there would not be irreparable harm.

It has been very easy, as I understand it, for companies just to establish that they would have a monetary loss to defeat the application. First of all, is my understanding correct, of the existing law?

Mr. KAUPER. Well, there may be a little disparity between what the existing law is in terms of its written standards, and the way it is in fact applied.

Mr. HUGHES. In the courts?

Mr. KAUPER. Yes. I think that the weight which is given in some cases to possible financial loss, you don't very often find set out in the standard which is commonly utilized. I think it is true that courts have some courts have tended to put rather heavy emphasis on financial loss, and that is really of two kinds: One, the general condition of the company, and two, more specifically, the fact that there may be a financial loss if this particular transaction doesn't go ahead, that they are anticipating some fruits from the transaction.

Mr. HUGHES. Of course, the effect is the same, isn't it, whether a law reads that way, or whether the court just interprets it that way, we still have the same net effect.

Mr. KAUPER. That's true.

Mr. HUGHES. The question is, does the Department have a position with regard to that burden? Should we not be changing the burden? Mr. KAUPER. You are carrying me back to the administration position on S. 1284. I think our feeling had been that a standard which tended to minimize the financial side of the inquiry would be to our general benefit. However, I think that the position as we evolved itand there are a lot of compromises that were worked through—we were ending up with a stand by way of compromises within the administration that I just didn't see would gain us anything; hence, we really dropped the endeavor to work that kind of compromise out.

Mr. HUGHES. I have just one final question. In any of your efforts to acquire premerger information, do you often meet the argument that it is confidential, proprietary, or otherwise secret information? Mr. KAUPER. Yes; commonly. I think we tend to meet it both sometimes simply as a "It's none of your business" response; second, and perhaps more significantly today, we meet it in terms of an argument that says, "We would be perfectly willing to give this to you, but you cannot protect it; and for that reason we will not give it to you."

I think, probably, we encounter that latter one somewhat more often. Mr. HUGHES. Have you had any situations where information that was allegedly secret, that could be very damaging, was furnished to the Department?

Mr. KAUPER. Yes, if by that you mean-I don't know what you mean by "damaging." But, if you mean by that traditional businesssecret type of information, the kind of information, in other words, that you would not normally share with a competitor, we hope, yes, some companies will give it to us. Others will not. Now, of course we can normally get it in any circumstance where we are authorized to issue a civil investigative demand. But, I took your question to mean voluntarily.

Mr. HUGHES. Yes.

Mr. KAUPER. Yes; there are companies that will give it to us.

Mr. HUGHES. Has it been your own personal judgment that the information is of such caliber, that it was so highly confidential that it could be damaging if leaked to a competitor?

Mr. KAUPER. Yes: I think we have obtained such information.

Mr. HUGHES. Have you had any difficulty with that information being leaked to competitors?

Mr. KAUPER. Not from within the Division. Now, if you come back to me 2 years from now and say, "Has there been any circumstance in which you have been compelled to disclose that information under the Freedom of Information Act," I'm not sure what the answer would be.

That's the major concern. I don't think there is a major concern that people within the Division have some habit of leaking this information. I think the fear is compulsory disclosure, not some whimsical act of a Division employee. That's a problem that, in my experience, we just really haven't had.

Mr. HUGHES. I thank you. Thank you, Mr. Chairman.

Mr. FLOWERS. Counsel suggested that I ask you if you required any additional appropriation to get rid of the mice. Sort of like an in-house proposition.

Mr. KAUPER. No, what we need to do is figure out a way to have the mice attack the roaches. [Laughter.]

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