Corporate Monopolists Try To Squeeze In More Mega-Mergers

I’m not sure that business leaders have fully understood how much the climate has turned against them in just the last year or so. The emergence of Bernie Sanders and Donald Trump, who both had the fact that American workers had been exploited and taken advantage of by their business and political leaders as central parts of their appeal, should have given them a pretty good hint. And Hillary Clinton has joined the bandwagon and is promising a crackdown on industries with undue concentration. But the heads of AT&T and Time Warner don’t seem to care with the announcement of their $85 billion merger. Trump has already come out against the merger and Bernie Sanders has said the deal should be killed. Hillary Clinton has been a little less forceful saying that “regulators should look at” the deal but both the Republican and Democratic ranking members of the Senate antitrust committee put out a joint statement saying the merger “would potentially raise significant antitrust issues”.

The NY Times today tries to spin this merger and the announcement of two other mega-mergers, British American Tobacco buying the remaining shares of Reynolds American that it does not already own and Qualcomm buying NXP Semiconductors, as examples of business leaders showing confidence in the future. That article also mentions the proposed mergers of Anthem and Cigna and Aetna and Humana, as well as the massive merger between Bayer and Monsanto. The health care mergers are currently opposed by the Justice Department and the Bayer deal has generated strong opposition in Europe.

Rather than expressing confidence in the future, it looks to me as though these companies are trying to rush through these mega-mergers before the door on these gigantic transactions close. The opposition to TPP, the collapse of the EU-Canada trade deal, and the rising opposition to these mega-mergers all indicate that the public no longer will give carte-blanche to business. For decades, the business elites over-promised on “free trade”. Dani Rodrick summed it up best when he says, “The elites minimized distributional concerns, though they turned out to be significant for the most directly affected communities. They oversold aggregate gains from trade deals, though they have been smallish since at least NAFTA. They said sovereignty would not be diminished though it clearly was in some instances. They claimed democratic principles would not be undermined, though they are in places. They said there’d be no social dumping though there clearly is at times. They advertised trade deals (and continue to do so) as “free trade” agreements, even though Adam Smith and David Ricardo would turn over in their graves if they read, say, any of the TPP chapters.” Business leaders to this day continue with the job-creator myth, saying that giving them a free hand will lead to an explosion of new jobs. Instead, the average median wage is exactly where it was in 1998, nearly 20 years ago. Meanwhile all the income gains have gone to the 1%, business executives, and corporate shareholders. And we have created an economy dominated by oligopolies. Since the Reagan era, business leaders have been given incredible leeway by both politicians and regulators. But that era is ending. The next few years will see increasing skepticism on any new trade deals and a heightened awareness of the need for better antitrust enforcement. It’s about time.