The proposed AT&T and Time Warner merger was subject to an antitrust lawsuit by the U.S. Department of Justice because they were worried about the negative effects such a market consolidation would have on consumer choice and product pricing. The deal did eventually go through and the DoJ lost the case.
However, it has brought more attention to the fact that our lives are being controlled by a shrinking number of large corporate entities. The disproportionately large market influence wielded by a handful of companies has been one of the reasons why wage growth has not kept up with economic expansion.
The below is an excerpt of an article by Jonathan Tepper where he sites Jan De Loecker and Jan Eeckhout’s conclusions on The Evolution of Average Markups:
“Market power has been rising in many industries. Americans have the illusion of choice, but in industry after industry, a few players dominate the entire market:
- Two corporations control 90% of the beer Americans drink.
- When it comes to high-speed internet access, almost all markets are local monopolies; over 75% of households have no choice with only one provider.
- Four airlines completely dominate airline traffic, often enjoying local monopolies or duopolies in their regional hubs. Five banks control about half of the nation’s banking assets.
- Many states have health insurance markets where the top two insurers have 80-90% market share. For example, in Alabama one company has 84% market share and in Hawaii one has 65% market share.
- Four players control the entire US beef market.
- After two mergers this year, three companies will control 70 percent of the world’s pesticide market and 80 percent of the US corn-seed market.”
Such concentration of power breeds corruption and governmental collusion. The previous administration did almost nothing to stop big mergers. We will see if this one does. It has just stopped the giant merger of Broadcom (Singapore) and Qualcomm. There is word that the huge and terrible buyout of Monsanto and Bayer (Germany) may be stopped. Monsanto should be left alone and die a natural death as people shun GMO products.
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