In 2305 - in our discussion of economic policy and specifically market failure - we mentioned that most economists argue that one role of the government in enhancing the free market is in breaking apart monopolies, or preventing them from forming in the first place.
Here's a story about concerns over recent mergers and what they might do to a freely functioning marketplace. There is a trend towards market concentration apparently.
- Click here for it.
Here's a story about concerns over recent mergers and what they might do to a freely functioning marketplace. There is a trend towards market concentration apparently.
- Click here for it.
This week, the American Medical Association formally asked the Department of Justice to block two health insurance mergers (Aetna’s purchase of Humana and Anthem’s acquisition of Cigna) that would reduce that industry to effectively three participants. Left unmentioned was the significant consolidation among health care providers that has helped spur the monopoly formation on the insurer side. After all, insurers lose bargaining power on prices when facing giant medical conglomerates, and regain it when they grow themselves.
This week, Anheuser-Busch InBev and SABMiller completed their $106 billion plan to combine, forming the world’s largest brewery, responsible for 30 percent of global beer sales. The new company said it would sell its stake in U.S. bottler MillerCoors to show regulators its commitment to competition. But it’s selling that stake to Molson Coors Brewing, its joint partner in the MillerCoors venture, diminishing its monopoly only by bolstering a large oligopoly partner. Molson Coors would instantly become the second-largest brewer in the U.S., right behind Anheuser-Busch InBev.
This week, Apple, Google and Amazon joined forces in a lobbying venture to promote technology-based financial services, or “fintech.” All the founding members of Financial Innovation Now have investments or outright subsidiaries in the fintech space. The teaming of three of the most powerful Silicon Valley firms to exploit a gap in financial regulation represents at least the appearance of collusion between companies nominally thought to oppose one another. It comes at a time when the same tech giants, along with Facebook and Microsoft, have entrenched control over the entire Internet infrastructure, from search to messaging to advertising to video and audio distribution to applications to storage.
Despite all these shifts in the economy, all moving toward greater market concentration, influencing every major issue for workers and consumers, the nation has met these changes with virtual silence. None of the major-party debates have posed a question about antitrust policy. Republican candidates talk around issues like high drug prices without mentioning that they are the by-products of monopoly. Stories pass through the news — like T-Mobile giving preferential treatment to a handful of companies for streaming services — without any recognition of how large companies get the benefit of a narrow market.
That story, and others like it, show how the new Gilded Age allows monopolists to help other monopolists, carving up the pie together and keeping out everyone else.
For more: Bring Back Antitrust.
