The Los Angeles Times from Los Angeles, California • 54

TOP COMMERCE AIDE HITS MERGER CURBS SohiO Project Faces No Real Need for New Restrictions, Chief Contends Key Pollution Tests EoeAnjjeles Slimee i and Sen. Edward M. Kennedy chairman of the Senate Judiciary Committee, to suggest legislation designed to cool the trend. Saying that "many of these mergers have nothing to do with creating economies" and are occurring in part because "managers just like to manage bigger companies and because a lot of companies have cash hoards," Shenefield has had the Justice Department prepare a tough legislative proposal. Among other things, it would ban any merger in which the resulting company would have annual sales or assets in excess of $2 billion (providing each of the companies involved had at least $100 million in sales or assets).

Kennedy, meanwhile, has called for "a three-tier plan that would prohibit mergers of the largest economic units, force merging companies in the second largest group to prove that their mergers would help competition, and essentially let the smallest companies exist under the present laws." But Jasinowski, a congressional staff economist who served in Carter's 1976 election campaign braintrust before taking his current disagreed sharply with this view. argued strenuously at the White such legislation, and I think a good case to convince the President," said. said he agrees that "the recent merits study and review. But it of us to bar certain mergers before any economic effect." that at least two factors provide for permitting mergers to go normal desire for companies to as to shield themselves against a in any particular industry, and a firms to strengthen themselves of foreign competition. subjects, Jasinowski: the economy will slow down this not slide into a recession.

He sees output of goods and services growing 2.5 this year, only slightly slower growth in the work force. confidence that inflation will 8 rate this year, compared with pace of price increases. This is a Please Turn to Page 16, Col. 2 BY PAUL E. STEIGER Tlmas Financial Edltar New federal antitrust barriers against corporate mergers and takeovers as in legislation recently advocated by the Justice Department, the Federal Trade Commission and key members of Congress would be a mistake, a ranking Commerce Department official said here Wednesday.

"I don't see any economic merits or benefits associated with putting any additional restrictions on mergers at this time," Jerry J. Jasin-owski, assistant Commerce secretary for policy, said in an interview. According to informed sources, the Commerce Department and President Carter's Council of Economic Advisers have counseled Carter against endorsing any new antimerger legislation, and in preliminary discussions he has indicated he is not disposed to do so. Carter is expected to make his final decision soon. The recent upsurge in mergers and takeovers, several of them valued at $1 billion or more, has led such figures as John H.

Shene-field, assistant attorney general for antitrust, tic: CHfe Etfeife? FUEL SHORTAGE A shortage of fuel for jet airplanes has forced the cancellation of over flights at six major airlines. The situation won't ease for a few months. Times photo AIRLINE PLANS FEWER DISCOUNTS Department's Policy The combination of rising costs and heavily crowded flights is leading the airlines to seek higher fares, despite the fact that widely advertised discount fares spurred traffic so much that the industry enjoyed its best profits in history last year. "Airline expenses are going to go up at a pretty stiff rate this year, and somehow they're going to have to get some additional revenue to afford that," said Michael Armellino, an airline analyst for the New York brokerage house, Goldman Sachs Co. When airlines cut fares in 1977 under pressure from the Civil Aeronautics Board and charter carriers, it helped push 1978 revenues over $20 billion.

Revenues are expected to be up another 10 or so this year, but profits, Armellino said, could fall to about $700 million. The lower fares spurred an air-travel boom, which helped the industry fill the previously empty seats that had been such a financial drain. But the plan has been so successful that there aren't many more empty seats to fill and little incentive to cut fares further in search of additional er, producers had been waiting for final rules which might affect contracts they might sign. Michigan may give tax breaks or loans to ailing Chrysler Corp. State officials said such financial assistance will be considered only if the federal government refuses loan guarantees for the No.

3 auto maker, which lost $204.6 million in 1978. Chrysler is the largest employer in the Detroit area and has 145,000 workers in Michigan. In another development, the Detroit Free Press reported that Chrysler is asking its suppliers to cut prices up to 2. The company declined to comment on the report. Chrysler relies more heavily than bigger auto makers on outside supplies for parts, so the savings could be substantial if some supply firms agree to help the company out.

Requesting such price cuts in times of financial distress is not an unusual practice, however. Congress was asked to look into the sale of a Penn Central unit. Leaders of six unions representing Pittsburgh Lake Erie railroad employes, who made a bid to buy the railroad under an employe stock ownership plan, charged that Penn job in 1977, "We've House against we've made he Jasinowski rash of mergers is precipitous we see He argued some justification forward: A diversify, so downturn wish by many in the face On other Predicted year but will the nation's 2 to than normal Expressed slow to an last year's 9 500 weekly probably Firm Insisting on Quick Local OK, Nev-' State Law BY LINDA GRANT Tlmts Staff Wrltar A compromise plan designed to pave the way for a project to transport Alaskan crude oil to Texas by way of a terminal and pipeline in Long Beach has run into new difficulties. The problem is that local air quality officials have so far failed to endorse a plan worked out by Standard Oil Co. of Ohio, the company proposing to build the terminal and pipeline, and the state Air Resources Board to clean up air pollution caused by the project.

The agreement to go ahead with the plan was announced with some fanfare by Gov. Brown last August. Crucial local hearings on the plan open today, with Sohio threatening to abandon its four-year struggle to win federal and state regulatory approvals if all remaining problems cannot be resolved by summer. It is not exactly clear who is at fault for the delays. Brown Administration officials and environmentalists blame Sohio, while the company claims that objections and requests for information have required considerable time for study and response.

Regardless of responsibility, Sohio now is demanding fast action on several fronts. "If we don't have a clear signal by this summer that we can move ahead with construction, then the project is in serious danger of being terminated," says William Culver, Sohio project manager in Long Beach. A final effort to win one of the most important permits still outstanding a construction permit to be issued by the South Coast Air Quality Management District is the key issue in today's district board hearings. Sohio has agreed to an $80 million package to clean up more air pollution in the Los Angeles air basin than the project would create. Should Sohio win the much-coveted air permit, however, it still will not have cleared the regulatory thicket.

Project manager Culver says that the Cleveland-based oil company, a subsidiary of British Petroleum London, also must win approval from the Coastal Commission to place two tanks on the pier at its planned Long Beach marine terminal, and be granted legislative relief in some form that will limit the period that opponents of the project can challenge Sohio in the courts. "The whole project is reaching a 60-day crescendo," Culver said in an interview at his Long Beach office. "We will either clear up these matters or walk away." The reason: The project, according to Culver, has a fixed end because current known reserves in Alaska are finite. "Every year's delay is subtracted from the life of the pipeline," he says. "As delays continue, the economic life of the project is shortened until it is no longer a good investment." Abandonment of the $1 billion project would deal a blow to the hopes of the Carter Administration and the Energy Department.

The project which calls for construction of a marine terminal, 10 storage tanks, and pipeline segments to connect existing lines all the way to Midland, Tex. could solve two problems: The oversupply of heavy, high-sulfur oil on the West Coast and the inability to increase production from Alaska's North Slope because existing transportation is expensive and inefficient. Said an Energy Department spokesman, "We are very anxious to see the Sohio project in operation. One of the key problems in getting maximum production from North Slope oil is transportation. Right now about 400,000 barrels of oil a day are Please Turn to Page 16, Col.

1 ended March 2 at Los Angeles and Long Beach harbors and Los Angeles International Airport, a 12.8 increase from the $14.5 million collected a year ago. That brings customs collections in the 22 weeks to date to $421.9 million, up 10.4 from $382.2 million at the same point last year. The number of passengers cleared through local ports fell 15 in the latest week-to 22,651 from 26,641 a year ago. The number of passengers cleared in the 22 weeks to date rose 19.5 to 716,056 from 599,130. World The overage bid at the IMF's gold sale was $241.68 an ounce.

The International Monetary Fund sold 470,000 ounces of gold at its latest monthly auction. Bids were received for a total of 1,534,400 ounces with successful bids ranging from $241.28 to $243.26 an ounce. Proceeds from the sale will add $92 million to the IMF's trust fund to benefit poor nations. The total raised for the fund from gold auctions to date is about $2.3 billion. Swissair will order 10 European Airbuses for $420 million.

The Swiss national airline also plans to take options for 10 more of United Seeks Fare usiness 14 Part III THURSDAY, MARCH 8, 1979 Mexico Plans to Boost Oil Price in April From Timas Wlra Sarvlcas Mexico's national oil company said Wednesday its oil prices will "almost certainly increase" next month to reflect numerous hikes by other producers in the wake of the Iranian oil cutoff. A spokesman for Pemex, the government-owned Mexican oil company, said the price it charges for crude oil will go up April 1 from the current $14.10 per barrel, but he did not say by how much. Pemex produces only 1.5 million barrels daily a small amount by world standards. In other oil-related developments Wednesday: Gulf Oil Corp. became the latest in a string of U.S.

oil companies to limit gasoline sales to their retailers. The spot price of some oil products is falling after hitting record highs during the Iran shutdown. The spot market price of heating oil has slipped noticeably, according to industry officials. The loss of Iranian oil in recent months will result in a 7 average increase in world oil prices above previous hikes announced by oil-exporting countires, a congressional study reported. Phillips Petroleum Co.

raised the limit on its gasoline sales to dealers in March to 75 of year-ago levels from 70, but it said the change was made to comply with new federal rules on petroleum allocations and doesn't change basically the amount of gasoline available. The Organization of Petroleum Exporting Countries is scheduled to raise its prices by 3.9 April 1, and may decide at its meeting schedule March 26 to make the increase larger because of supply problems by the Iranian revolution. Mexico traditionally bases its oil price on the OPEC price, although it is not a member of the cartel. Mexican officials had indicated last week that Mexico would probably match whatever OPEC did April 1. OPEC's current base price is $13.35 per barrel, but some members have raised prices on their own by 7 to 10 to take advantage of a supply squeeze.

Prices for crude oil on the spot market, where oil not covered by long term contracts is sold, have been running at about $20 a barrel lately. Many former customers of Iran have had to turn to the spot market to meet their oil needs. The spot market price of heating oil, however, is coming down after hitting record levels in recent weeks, according to Vince Sgro, editor of Oil Buyers' Guide, an industry newsletter. But Sgro added that prices of heating oil usually fall at this time of year as the weather warms up and demand for the products slackens. "Buyers are stepping out of the market," Sgro said.

"We're seeing a rapid increase in the price of all products, except gasoline." Please Turn to Page 24, Col. 1 the A-310 passenger jets. Swissair's board of directors is expected to formally approve the proposal at its March 14 meeting. The 10 Airbuses will be powered by engines produced by Pratt Whitney Aircraft Group, a subsidiary of United Technologies East Hartford, Conn. The order is worth about $50 million in engine business to Pratt Whitney.

Savings and loans in Arizona, California and Nevada received an estimated $400 million in net new savings during February, compared with savings inflows of $430 million a year ago supplies of distillate oil, used mainly for home heating purposes, fell nearly 14 million barrels to 128.4 million barrels in the week ended March 2, from 142.2 million barrels a week earlier, the American Petroleum Institute said SoCaL Edison's electricity production for the week ended March 3 totaled 1.1 billion kwh, up 0.6 from the preceding week and 2.4 greater than the same week a year ago A bill was introduced in both houses of Congress to provide estate tax relief to heirs of the owners of local independent newspapers in hopes of curbing the growth chains and media conglomerates Dainippcn Ink of Japan raised its bid for Polychrome to $26 a share from $25. Swiss Concern Agrees to Buy 51 of IHOP BY NANCY YOSHIHARA Timti Staff Wrlttr Wienerwald Holding A.G., a Swiss company, has reached agreement in principle to acquire 51 of the common stock of Los Angeles-based IHOP formerly International Industries Inc. Robert Paul, attorney for the Swiss firm, said Wednesday that Wienerwald will purchase 2.8 million shares of IHOP common stock (on a fully diluted basis) for about $3.7 million. The shares will be purchased from IHOP's major lenders, a group of 22 banks and lending institutions which control 71 of the company's outstanding shares. The purchase price for the shares varies, but it will not exceed $1.75 a share, according to IHOP President Walter McBee.

The price thus will be well below the recent market price for IHOP shares. IHOP, which operates 552 restaurants including International House of Pancakes, Love's and Copper Penny in California, did not trade Wednesday. The agreement in principle provides for Wienerwald to have voting rights and rights of first refusal on the additional 20 of IHOP shares owned by the lenders. Wienerwald also will purchase a substantial amount of IHOP's $32 million of existing secured debt. IHOP said there may be a revision of the terms of the secured debt agreement but no reduction in the amount outstanding.

In addition, Wienerwald will lend IHOP $3 million in working capital as part of a $6 million guarantee of IHOP's existing secured debt. McBee called the Wienerwald package "an excellent deal for all three parties Wienerwald, lenders and particularly public shareholders." IHOP was created three years ago from the massive reorganization of International Industries. Under terms of the restructuring, the company's lenders, headed by Security Pacific National Bank, forgave about $26 million in debt and accrued interest in the new company, IHOP. IHOP then acquired the old International Industries, which had been in serious financial difficulty since the recession of 1970. Since 1976, IHOP has returned to profitablity.

In fiscal 1978, the company had net income of $2.5 million, or 47 cents a share, on revenues of $62.5 million. Wienerwald, which operates 750 restaurants in Europe and the United States, is privately held by Friedrich Jahn who opened the first Wienerwald Restaurant in Munich in 1955. Business National The Fed spent $6.86 billion in order to prop up the dollar. The money, in the form of Swiss francs, West German marks, and Japanese yen, was used to purchase dollars on foreign exchange markets between Nov. 1, when President Carter announced his dollar rescue program, and Jan.

31. The New York Federal Reserve Bank said the dollar "is standing on its feet now," but the Fed is prepared to intervene again if markets become disorderly. Improvement in the dollar's value enabled the Fed to repay some debts incurred in the support action, leaving a net sales balance of $4.8 billion as of Jan. 31, it said. The Fed also announced that major foreign central banks spent $33.1 billion to support the dollar in the November to January period.

New horrs loan rates were stable for the first time in a year. The effective interest rate on conventional mortgages for new homes in February averaged 10.18, unchanged from January, the Federal Home Loan Bank Board reported. It was the first month without an increase in that rate for more than a year. The effective rate on loans for Increase passengers. "It's very difficult at this point to generate higher volume by cutting fares any more than you have," Armellino said.

"Once the airplane is full, to get additional revenue out of that airplane, you've got to increase the fare." In this way, some industry executives argue, the fuel shortage may prove a blessing in disguise for the airlines because it will prevent over-expansion and help keep the planes operating at full capacity. Fare increases will be easier to push through because no carrier will have an advantage in undercutting its competitors to grab more traffic. Fuel supplies should continue to be limited for a while, even though the government recently lifted its price controls on jet fuel. Texaco, one of the larger jet fuel suppliers, said it would allocate aviation fuel. It will limit each customer to 80 of its fuel purchases in March, 1978.

Texaco said the allocation procedures previously mandated by the Energy Department meant it had been supplying quantities of jet fuel substantially larger than its contractual commitments required. Central Co. reneged on a promise to give employes the last opportunity to bid on the railroad. Penn Central last week agreed to sell its 93 interest in the railroad to the Pittsburgh Lake Erie made up of the railroad's current president and vice president-general counsel, two Pittsburgh lawyers and a Beloit, company. Penn Central officials deny that they promised to give employes last crack at the and that all bidders were given a fair chance.

New York's Roosevelt Hotel was leased by a Pakistani airline. Pakistan International Airline officials announced in Karachi that they signed a 30-year lease with an option to buy the hotel, located at 45th St. and Madison Ave. in New York City. F.

R. Khan, general manager of the airline, said a subsidiary would run the 19-story, hotel jointly with Cox which presently operates the facility. Cox also runs the Hotel Biltmore at Madison and 43rd St. California Customs collections at local ports rose in the latest week. The U.S.

Customs Service said it collected $16.4 million in the week. BY TOM REDBURN Tims Staff Wrlttr United Airlines Wednesday joined the ranks of U.S. airlines seeking higher fares and fewer discounts with the announcement that it plans to increase fares 1.2 on May 15. United also is seeking to narrow the gap between its regular fares and discount fares. The announcement comes on the heels of United's decision to cancel 429 weekly flights, or about 3.2 of its total 12,000, during March because of limited jet fuel supplies.

Eastern, Delta, and Continental also have canceled some flights to conserve fuel for their more crowded routes. Eastern, for example, said Wednesday it had canceled 31 lightly traveled flight segments Tuesday and said it will decide on a day-to-day basis which stops to eliminate depending on its fuel situation at all airports. So far, the fuel shortage has had almost no effect on flights to or from Los Angeles. The price of jet fuel, which accounts for 20 of a typical airline's expenses, has been rising at a 6 annual rate so far this year and analysts expect a 12 hike by the end of 1979. in Brief previously occupied homes in February rose to 10.36 from January's record 10.33, but that was considerably less than the 0.25 gain of the previous month.

"No clear trend is apparent based on these numbers," said FHLBB Chairman Robert H. Mc-Kinney, indicating that future figures will be needed to show if the surge in mortgage rates over the past two years may be dying down. California figures have been higher than the national averages reported by the FHLBB. The FERC adopted rules to start "surplus" gas flowing. The Federal Energy Regulatory Commission announced it had adopted final rules that should start natural gas flowing to market to replace some imported oil.

Government and industry experts estimate that about 1 trillion cubic feet of gas can be brought to market, enough to replace 472,000 barrels of oil a day. That is nearly half of the amount that the U.S. earlier this month pledged to save. The gas had been bottled up in producing states because of price ceilings on interstate sales prices. A deregulation bill signed last November placed all gas under federal controls which will phase out at the end of 1985, howev.