How Mergers Damage the Economy

[Commentary] In many industries, like airlines, telecommunications, health care and beer, mergers and acquisitions have increased the market power of big corporations in the last several decades. That has hurt consumers and is probably exacerbating income inequality, new research shows. Under the George W Bush administration, the wireless phone industry consolidated from six national companies to four. The two largest, Verizon and AT&T, now command about 70 percent of all subscribers. The Justice Department’s antitrust division has in recent years won nearly every merger challenge it has brought. The division and the Federal Communications Commission prevented Comcast from buying Time Warner Cable and AT&T from acquiring T-Mobile. But the division’s record suggests that it could be taking a tougher line.

Congress should also study whether there are ways to strengthen the antitrust laws. It could, for instance, require regulators to consider whether mergers in concentrated industries are in the broader public interest, not just whether they would harm consumers through higher prices. The Federal Communications Commission can already use such a test to evaluate media and telecommunication deals to determine, for example, whether a merger will limit the diversity of opinions in media. Unfortunately, Congress is unlikely to adopt new antitrust legislation while Republicans are in control of both houses.