1 Some Democrats in Congress are warning that a complicated new funding device for the two federal antitrust agencies could result in further cutbacks in a regulatory area already reduced sharply in recent years.
2 The funding mechanism, which has received congressional approval and is expected to be signed by President Bush, would affect the antitrust operations of the Justice Department and the Federal Trade Commission.
3 As a part of overall efforts to reduce spending, Congress cut by $30 million the Bush administration's request for antitrust enforcement for fiscal 1990, which began Oct. 1.
4 To offset the reduction, Congress approved a $20,000 fee that investors and companies will have to pay each time they make required filings to antitrust regulators about mergers, acquisitions and certain other transactions.
5 Some Democrats, led by Rep. Jack Brooks (D., Texas), unsuccessfully opposed the measure because they fear that the fees may not fully make up for the budget cuts.
6 But Justice Department and FTC officials said they expect the filing fees to make up for the budget reductions and possibly exceed them. 'It could operate to augment our budget,' James Rill, the Justice Department's antitrust chief, said in an interview.
7 Under measures approved by both houses of Congress, the administration's request for $47 million for the Antitrust Division would be cut $15 million.
8 The FTC budget request of $70 million, about $34 million of which would go for antitrust enforcement, would also be cut by $15 million.
9 The administration had requested roughly the same amount for antitrust enforcement for fiscal 1990 as was appropriated in fiscal 1989.
10 The offsetting fees would apply to filings made under the Hart-Scott-Rodino Act.
11 Under that law, parties proposing mergers or acquisitions valued at $15 million or more must notify FTC and Justice Department antitrust regulators before completing the transactions.
12 Currently, the government charges nothing for such filings.
13 Proponents of the funding arrangement predict that, based on recent filing levels of more than 2,000 a year, the fees will yield at least $40 million this fiscal year, or $10 million more than the budget cuts. 'When you do that, there is not a cut, but there is in fact a program increase of $5 million' each for the FTC and the Justice Department, Rep. Neal Smith (D., Iowa) said during House debate.
14 But Rep. Don Edwards (D., Calif.) responded that a recession could stifle merger activity, reducing the amount of fees collected.
15 The antitrust staffs of both the FTC and Justice Department were cut more than 40% in the Reagan administration, and enforcement of major merger cases fell off drastically during that period. 'Today is not the time to signal that Congress in any way sanctions the dismal state into which antitrust enforcement has fallen,' Mr. Edwards argued.
16 Any money in excess of $40 million collected from the fees in fiscal 1990 would go to the Treasury at large.
17 Corporate lawyers said the new fees wouldn't inhibit many mergers or other transactions.
18 Though some lawyers reported that prospective acquirers were scrambling to make filings before the fees take effect, government officials said they hadn't noticed any surge in filings.

The funding mechanism , which has received congressional approval and is expected to be signed by President Bush , would affect the antitrust operations of the Justice Department and the Federal Trade Commission .
affect
How would the funding mechanism affect the antitrust operations of the Justice Department and the Federal Trade Commission?