Is big business really getting too big?
Joe Biden, America’s president, spoke for many politicians the world over when he blamed it for greed-fuelled price rises, sluggish wage growth, forgone innovation and fragile supply chains. His trustbusters at the Federal Trade Commission (FTC) have been going after large deals merely because they are large—or at least that is how it feels. Courtroom defeats do not dampen the agency’s zeal.
The latest came on July 11th, when a judge rejected its request to block Microsoft’s $69bn acquisition of Activision Blizzard, a developer of video games. The FTC is expected to appeal against the ruling. The EU’s competition authorities are making noises about breaking up Google.
Last year Britain’s Competition and Markets Authority (CMA) derailed the $40bn acquisition by Nvidia, a semiconductor giant, of Arm, a chip-designer. Trustbusters invoke three justifications for their renewed vigour: greater market concentration, reduced churn among the world’s biggest firms and rising corporate profits. On the surface all three point to rising corporate power.
Look closely, though, and the trends may be the result of benign factors such as technological progress and globalisation. In some local markets, greater concentration may, paradoxically, have led to more competition, not less. And the covid-19 pandemic may have planted the seeds of a further competitive revival.
Some big firms, it is true, have been collecting rents, including in big sectors such as health care. But trustbusters’ strategy—to reflexively question any deal involving a big firm—is wrongheaded. That concentration has been rising is not in question.
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