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Merger Mania

What, are we crazy? After all the “too big to fail” failures, why do we keep letting mega-companies merge and eliminate competition? After all, competition is the fuel that drives free market capitalism.

The New Yorker has a fascinating article that is poorly titled “Why I Left United Airlines“. Not that there isn’t enough to write about United Airlines and their rapid decline after their merger with Continental.

Like how the newly combined airlines raised prices by as much at 57% on routes that were newly uncompetitive. And that United now has the worst quality rankings in the nation, even worse than discount airlines. And that they have more consumer complaints than any major airline. The only winner in that merger seems to be the now ex-CEO of United, who pocketed $17 million.

But the article is actually far more interesting, talking about mergers in general, saying: “The sinkhole effect — which is not confined to airlines — means that we need to take a much closer look at mega-mergers in the essential industries whose services are hard to avoid and which have a disproportionate effect on quality of life.”

Did you know that multiple studies (including by the FTC) have confirmed that when hospital chains merge, two things inevitably happen: prices increase, and more dead patients. Oh, and there is one more result: increased profits for the chain (at the expense of your wallet and possibly your life). That sounds like the archetypal bad merger. After all, the FTC is supposed to stop mergers that are bad for consumers. How much worse can you get?

Bottom line is, why are we even thinking of allowing cable and Internet giants Comcast and Time Warner to merge? Seriously, are we crazy?



  1. Ralph wrote:

    Irony of ironies, just saw a popup advert on your site for a company specializing in M&A!

    I know, IK, you don’t pick the rolling ads, but it just seemed symbolic of the all pervasive, and sometimes perverse, drive in this economy to make a buck off of anything and everything. Anything less is demonized as socialist or worse. Whether it’s in education, healthcare, or essential services and utilities, it seems if you can’t make a huge buck off it in this country it’s gotta go. There is no “We” in “Me Me Me!”.

    There seems to be an inverse relationship between the increasing number of lobbyists in DC and the value of anything worthwhile coming out of Congress for the middle class. Our “representatives” are, in reality, just corporate spokesmen.

    So I guess if you really believe corporations are people (though I’ve never seen one bleed or go to jail), then the “people” have spoken.

    Monday, November 17, 2014 at 1:11 pm | Permalink
  2. Iron Knee wrote:

    Google tries to pick ads that match the page content, but also to match the viewer’s interests. I can guess why it thought that web page was about M&A.

    Tuesday, November 18, 2014 at 11:13 am | Permalink