Since the new millennium dawned, megamergers have come at the rate of one a week. Time Warner merged with America Online, creating the fourth biggest company of any kind in the world. Glaxo Wellcome and SmithKline Beecham joined hands to create what the former's chairman called "the Microsoft of the pharmaceuticals industry". It will have 7.3 per cent of the world market, which doesn't sound much until you understand that, because of the segmented nature of the drugs industry, it will have a virtually unassailable lead in antibiotics and vaccines and, indeed, in almost every therapeutic area except heart disease and cancer. Now, Warner Music, a subsidiary company of Time Warner, has linked with EMI to control about a quarter of the world's music industry.
Because these affairs are covered mainly on the City pages, and discussed largely in terms of the prospects for shareholder returns (usually adjudged positive, since mergers equal job cuts), most people are unaware that they should be bothered at all by what are usually presented as forces of nature. After all, the Beatles or the Spice Girls won't actually sound any different because Warner now controls the EMI label. But bothered we should be and not only because a merger always creates insecurity and apprehension among tens of thousands of employees and their families.
Not all mergers are bad. But all mergers deserve scrutiny - the kind of scrutiny that we would give to, say, a ministerial reshuffle- because the big corporations now affect our lives at least as much as governments do. Size matters. It gives corporations more power to fix prices, more power to restrict choice, more power over governments. Faced with laws or taxes or official purchasing decisions they dislike, they can threaten to relocate overseas. They can demand, and they will get, the ears of leaders.
Consider the two mergers in the entertainment, or media, industry. They are examples of what business calls vertical integration and many countries used to have tough regulations to stop it. For example, in the US, film studios were not, by and large, allowed to own cinemas, nor were the major television networks, such as CBS, allowed to make entertainment shows or movies for their own stations. Without such restrictions, it was reasoned, the work of independent producers would be blocked. The analogy with the Internet hardly needs labouring. Do not be surprised if, in future, people logging on through AOL find themselves steered to Time Warner films, CNN world news, Time magazine articles and EMI records. Remember that, according to the forecasters, the Internet will soon become the main distribution artery for all these media. Nor is that all: as Naomi Klein wrote, in last week's NS essay, the biggest modern corporations are not content with dominating one product area. They want to dominate our entire lives, invading retailing, travel, clothing, food, toys, sport and anything else you care to think of - "if you aren't everywhere, you're nowhere," as one media pundit has put it.
Surely, you may ask, the Internet puts fewer physical restrictions on delivery than we have now? There will be nothing to stop people calling up, say, an independently produced film or a small magazine website. Indeed not, just as there is nothing to stop people voting for somebody other than Al Gore or George Bush in the US elections and nothing to stop people shopping at high street greengrocers or butchers rather than the supermarkets. But inertia, convenience, habit and, above all, the power of advertising and brand familiarity conspire to crush the competition. The struggling newcomers are hard to find and, once found, seem shabby or unsophisticated compared to the expensively designed and marketed products of the big boys.
The British fondly imagine that the Americans have fierce anti-trust laws. They are still stronger than their UK equivalents (as the Microsoft case shows) but, alas, Ronald Reagan scrapped most of them in the 1980s, so that the number of anti-trust prosecutions fell by half during a period when the ten biggest mergers in American history took place. Once breached, the barriers against corporate mergers and monopolies become ever weaker; the more powerful the company, the more governments fear to frustrate it. If even the most powerful nation in the world cannot control the corporations, it is time to consider an international regulatory authority. Even if it were, for a start, quite weak it would at least introduce another dimension to the debate and take it beyond the City pages.
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