Merger Mania

[Robert Weissman <rob@essential.org>]

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Robert Weissman
Essential Information			|   Internet:	rob@essential.org


With the last embers of the slash-and-burn merger craze of the 1980s still
glowing, the 1990s has witnessed an even more intense consolidation
frenzy. Last year saw $1 trillion in mergers among U.S. companies, almost
50 percent more than the record levels of 1996.
	The new mergers, like their forebearers a decade earlier, pose
serious threats to society. They undermine job security, raise consumer
prices, inhibit small business development, undermine the dynamism of the
economy and sap the vitality of our political democracy.
	Antitrust policy is the main tool available to combat excessive
concentration of economic power, and the correlative centralization of
political power. But the federal cops on the antitrust enforcement beat
have done little more than kick back and drink coffee and eat donuts for
the last decade and a half. The Clinton Justice Department and Federal
Trade Commission have admittedly shown more of an interest in antitrust
enforcement than their Reagan-Bush predecessors, but they have done
precious little more in actually challenging mergers.
	Consider the merger record of the last few years. Among others,
the banking, television and telecommunication industries are undergoing a
spate of mergers more substantial even than those of the previous decade. 
	* In banking, giants Chase Manhattan and Chemical Bank combined in
1995 to create the nation's largest bank, with more than $300 billion in
assets. Multibillion dollar mergers have become the norm in recent years.
Last August, NationsBank announced the biggest bank purchase ever -- the
$15 billion acquisition of Barnett Banks. That record was topped in
November, as First Union sought to buy up CoreStates for $17 billion.
	The result: more than 70 percent of U.S. banking assets are now
controlled by the 100 largest banking organizations. 
	The consequences of this industry concentration are well-known and
not open to serious dispute. Decreased competition has led to: increased
consumer banking rates (notice how your bank card and checking fees rise
as the number of neighborhood banks shrink?); widespread bank closures;
the creation of "too-big-to-fail" banks that receive de facto, free
insurance from the federal government; and, perhaps most disturbingly, a
credit crunch for small businesses and borrowers from poor communities.
	* Television broadcasting mergers have proceeded at a dazzling
pace. In over-the-air television broadcasting, Westinghouse, owner of the
largest radio network, recently bought CBS. Disney, a major content
provider, acquired ABC. In cable, Time Warner, which already owned the
fledgling Warner broadcasting network and is the nation's second largest
cable operator, bought Turner, the parent company of CNN, TBS, TNT and
others. 
	These types of mergers induce a narrowing of the media
conversation at a time when new technologies could spark a cacophony of
voices. This represents a dramatic blow against American democracy, at a
time when it desperately needs an infusion of new energy, new voices and a
new sense of the possibility of citizen empowerment.
	* In the telephone industry, Bell Atlantic has taken over Nynex,
Southwest Bell and Pacific Bell merged and now WorldCom is maneuvering to
acquire MCI.
	These mergers threaten to stifle the competition that has driven
down long-distance phone charges, and head off competition in local phone
service before it ever starts.
	Slowing merger mania will require breathing life back into the
core antitrust principles that guided the country from the 1914 passage of
the Clayton Act until the early 1970s. A conservative law and economics
movement known as the Chicago School has blinded the federal judiciary to
many of the costs of mergers, which has in turn intimidated the Clinton
administration from challenging mergers.
	The single best hope for revitalizing antitrust law and policy may
now be the Justice Department's challenge to Microsoft. Microsoft, which
controls 90 percent of the market for personal computer operating systems,
is trying to leverage its dominance in that market into everything from
computer browsers to on-line airplane ticket sales. 
	Microsoft has been so ruthless in its expansion and acquisition
strategies, and so disdainful of both the Justice Department and the
federal judiciary, that is has generated governmental and public support
for antitrust enforcement of a kind not seen in decades.
	Perhaps it has required the emergence of Bill Gates, a modern-day
John D. Rockefeller, to remind the nation's judges and antitrust
authorities of a century's accumulated learning of the dangers of
concentrated corporate power.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor.

(c) Russell Mokhiber and Robert Weissman