To Turn a Giant into a Midget

For more than a year, while the Justice Department has grown more cautious about pressing antitrust suits and opposing mergers, the Federal Trade Commission has become increasingly aggressive. Last week, in one of its boldest actions yet, the FTC moved to turn a giant into a midget. The commission ordered Maremont Corp. of Chicago, a leader in the automotive-parts field, with sales last year of $186 million, to a Washington hearing next month. The agency's aim is nothing less than to make Maremont sell off 40 companies that accounted for about $100 million of the total.

The FTC complaint against Maremont covers acquisitions dating all the way back to 1953. At that time, Maremont, which started 91 years ago as a black smith shop, was one among many small companies manufacturing or rebuilding replacement parts for automobiles. President Arnold Maremont, who divides his time between the company, art collecting, lecturing on business at universities and involving himself in Chicago social welfare programs, decided to introduce some size and prestige to what was pretty much a grubby, disorganized industry. He brought in skilled executives, bought out other companies. Today his organization gets 30% of its revenue from replacement parts like mufflers and shock absorbers, 47% from selling new or rebuilt parts to distributors, another 15% from the manufacture and sale in the U.S. and 60 other countries of textile machinery, a field that Maremont moved briskly into five years ago. Maremont also gets 8% of sales from electronic equipment and armaments; it is the sole supplier of M-60 machine guns for the armed services.

Now one of the industry's biggest companies, Maremont had intended to expand even more, mostly by extending its distribution organization from the present 17 states. But the FTC charges that earlier acquisitions have created unfair competition for other parts manufacturers because of Maremont's broadening line of new products. Moreover, says the complaint, the company has "disparate power" and a "decisive competitive advantage" in parts rebuilding. Because it both makes and distributes parts, and because its growing distribution network deprives competitors of outlets for their own products, Maremont in the eyes of the bolder FTC is a vertically integrated company that clearly violates antitrust laws. Maybe so, but one defense Maremont might make next month is that there is still some competition somewhere. Earnings were off 37% last year, and Maremont finished the first quarter of the year in the red.

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