The United States - and for that matter the world - is going through the biggest wave of corporate mergers and acquisitions in history. In the process, the American economy is being drastically restructured. And there's more to come, the experts say.
Is that good or bad?
You aren't hearing any real debate about the merits of this extraordinary trend in the presidential campaign. Though mergers are affecting millions of Americans, the topic is not considered a vote-grabber.
Neither Vice President Al Gore nor Texas Governor George W. Bush have offered a detailed plan for dealing with the increased concentration of economic power.
So far, it appears that Mr. Gore is an adherent of the Clinton administration's relatively strong antitrust policy.
But Mr. Bush is more of a mystery. Will he follow the somewhat less-tough policy of his dad, former President Bush, or the laissez-faire policy under the Reagan administration?
Albert Foer, president of the American Antitrust Institute, a Washington think tank, wonders if Bush has "a strong but secretive attitude" on antitrust policy which might come out after the election. It would be revealed in his appointment of chiefs of the Justice Department's antitrust division and the Federal Trade Commission (FTC), the two antitrust watchdogs in the US.
[Joel Klein, head of the antitrust division, last Tuesday announced his resignation. He has been chief architect of the case against Microsoft Corp.]
Yet the impact of mergers on business competition is crucial.
"An enlightened antitrust policy is essential to the vitality of the innovative companies which provide the foundation for American prosperity," says Peter Morici, an economist at the University of Maryland's business school, in College Park.
"We have got a merger a day now," says Paul Juhasz, of Thomson Financial Securities Data, a Newark, N.J. firm that keeps track of the data.
That's an understatement. Thomson's own data show there have been 7,583 deals so far this year of companies valued at a total of $1.34 trillion. By year end, 2000 could break the 1998 $1.6 trillion record.
In the financial area alone, there have been $494 billion in takeovers and mergers this year.
"Sooner or later it is going to have to slow down or we are going to have one big company [on Wall Street]," says Mr. Juhasz.
In total, there have been $6.5 trillion worth of deals in the US since 1995, $12 trillion worldwide.
In comparison, the total output of goods and services in the US this year will amount to almost $10 trillion.
Some 61,484 mergers and acquisitions have been announced since 1995 in the US.
Challenger, Gray & Christmas, an outplacement firm in Chicago, has counted at least 320,258 layoffs announced by companies tying the knot in those five-plus years. Not all layoffs announced are carried out; not all layoffs are counted.
Many, many workers have seen their jobs change dramatically. Customers have found the changes sometimes beneficial, often a nuisance. Ask anyone who has had a bank account switched as a result of a merger.
Behind the merger wave are several factors. One is high stock prices. These make it easier to use stock for purchases.
Another is globalization.
"Companies are looking to position themselves in the world market," says Eleanor Fox, a law professor at New York University. They hope to spread research costs over a large market.
A third is the development of computers and the Internet. "There's a Cambrian explosion of new life forms in business," says Mr. Foer, referring to a geologic period some 570 million years ago.
William Shepherd, an economist at the University of Massachusetts, Amherst, has a more skeptical view. He sees corporate executives as often seeking dominant positions in their markets.
"A lot of mergers shouldn't happen," he says. "They are driven by greed or pride. Most mergers work out badly."
In recent years, the stock of the acquiring company most often takes a tumble, he notes.
Antitrust agencies are stretched thin to keep up with the more than 25-fold jump in merger volume since the end of the Bush administration. The FTC has a tight budget this year of $125 million and 465 people engaged in antitrust work. Antitrust division numbers are similar.
Fines or settlements with companies more than cover the costs.
Because of globalization, the two agencies are cooperating closely with the competition department in the European Union.
In some areas, the Europeans have a tougher antitrust view than American trust-busters. They strive to protect the ability of European firms to stay in business. They just charged Wal-Mart with predatory pricing in Germany.
In the US, it would almost take a form of business thuggery for a firm to be charged with driving out competition by low prices.
(c) Copyright 2000. The Christian Science Publishing Society