With corporations enjoying what industry observers have called a “once-in-a-generation opportunity to make acquisitions and consolidate power,” the American Economic Liberties Project released “To Save Jobs and Slow Inequality, Stop the Merger Frenzy,” a new policy quick-take that shows the economic consequences of the ongoing merger wave and outlines solutions for policymakers to address this corporate consolidation.
“Today’s record-shattering merger frenzy is supercharging the concentration of wealth and power in America,” said Sarah Miller, Executive Director of the American Economic Liberties Project.
“Any policymaker that cares about reining in Big Tech, creating good jobs, ensuring start-ups and honest businesses have a fair shot, or strengthening consumers’ power in the marketplace should view this massive merger frenzy as a five-alarm fire,” said Miller. “The FTC has proven effective in chilling some of the largest deals, but the runaway pace of consolidation necessitates additional resources for the antitrust agencies and sustained Congressional attention.”
In 2021, merger activity reached an all-time high of $5.8 trillion, with private equity spending more than $1 trillion on deals over the course of the year—up 110 percent compared to 2020. Banks announced a larger total deal value in mergers and acquisitions in the first half of 2021 than in all of 2020.
“In the last 40 years, wealth and power have been consolidated in the hands of a small minority while the prospects for almost everyone else have been diminished and locked out of opportunity,” said Lisa McCormick, a New Jersey Democrat who has championed progressive economic reform. “Reaganomics had a lasting impact on America—which was amplified by reckless Republican tax cuts for the rich under George Bush Jr. and Donald Trump—so it is time to reverse Reaganomics, rebuild America and restore hope for middle-class citizens who have been cheated for 40 years!”
The Biden administration has already taken important steps to address corporate power, mandating in its Executive Order on Promoting Competition in the American Economy that every federal agency take on the problem of corporate concentration.
The Federal Trade Commission is also laying the groundwork to fully restore the agency’s ability to address rampant consolidation by restricting future acquisitions for firms that attempted anticompetitive mergers previously, rescinding the 1995 prior approval merger policy that limited the agency’s ability to deter problematic mega-mergers, withdrawing the unsound Vertical Merger Guidelines, and changing the Merger Review Process to make clear that 30 days without notice does not equate an approval for mergers.
Still, there remains much work left to do. “Stop the Merger Frenzy” outlines next steps for Congress, the White House, and antitrust enforcers, recommending that:
- Congress should include prohibitions against mergers and acquisitions in proposed infrastructure legislation or as a stand-alone legislative priority, and consider a series of other legislative options;
- The enforcement agencies should continue to signal to market participants that they shouldn’t expect business as usual; and
- The enforcement agencies should end the use of settlements and divestments for merger transactions.
Read“To Save Jobs and Slow Inequality, Stop the Merger Frenzy” here.
Learn more about Economic Liberties here.