What is the correct number of corporate mergers that should be allowed? The Federal Trade Commission (FTC) thinks it knows the answer: less. It has recently moved to block deals involving, new cancer detection technologies, vaping products, and more.
A more agnostic approach to merger policy would make more sense. That’s why CEI just released a short video in the “Not a Policy Paper, Just a Thought” series, explaining why mergers should succeed or fail on their merits, not according to regulators’ ideological preferences.
Creative destruction is everywhere, and mergers are part of both the creative and destructive parts.
For example, the television market has moved from a cable and satellite oligopoly to a panoply of streaming options. Some form of reconsolidation may be on the way as companies find cost advantages to scaling up, and consumers find simplicity in managing fewer subscriptions. Or if that doesn’t satisfy customers, maybe someone will create a kind of an in-between á la carte model.
Who knows what that market will look like in 10 years? No one does, not even regulators in Washington. About the only thing we do know is that mergers and selloffs will likely be part of that trial-and-error process.
For more on mergers, see Jessica Melugin’s and my comments to the FTC on its upcoming merger guideline revisions, Tim Muris’s and Bruce Kobayashi’s paper on the Illumina-Grail cancer detection test merger, and CEI’s dedicated antitrust site antitrust.cei.org.