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?