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Mergers and Acquisitions Beget More Regulation

Mergers and Acquisitions Beget More Regulation

Mergers and Acquisitions Beget More RegulationIn the United States, we have been on a substantial merger and acquisition frenzy for the past 12 years. That is to say, most company’s wishing to consolidate, acquire or take-over a competitor has been given the preverbal “green light” to create economies of scale by consolidating markets in which they compete horizontally. It seems that both Wall Street and regulators, for that matter, see these combinations as industry building mechanisms that will benefit industry dynamics, and the like to further innovation and reduce prices, while coming to believe the hype and rhetoric fed to them by an army of lobbyists hired just for that purpose. See (Internet explodes with stark, anger, despair over T-Mobile’s sale)

The fact is that these mergers do nothing more than create more regulatory oversight as promises of synergies, reduced prices, and job creation fall to market realities, i.e..supply and demand; regulators are forced to intervene while more lobbyists are thrown at those same regulators to hail the destructiveness of more regulation. Does it seem to be a [cycle creating a cycle], I think so? The never ending cycle of Wall Street and lobbyists creating pretty-links for everything merger, while corrupting legislators to be short-sightedness, thereby promoting the preverbal regulation cycle in the first place. See (Regulator Merger Approval Timeline)

An evitable fight for equilibrium takes place with each entity, company and regulator bringing an (all-or-nothing) attitude which permeates markets with increased litigation, higher prices, consumer dissatisfaction, while reverting back to the same cycle again.  We seem ignore the past fostering a visit from “when history repeats itself, or man repeats himself” time and time again. The allowances for a so-called merger-mania economy constitutes a market feeding frenzy where the financially powerful devour their weaker rivals, leaving nothing but bread-crumbs of a former market for regulators to make sense of. The market in essence, cannibalizes itself, creating duopolies or actually monopolies disguised as duopolies. See (9 Tech Stocks That Could Be the Next Takeover Targets)

We can look at market conditions from past to present, dissect the number of entrants Vs incumbents left to represent competition, and see a tragic representation of true competition. Although that statement does not pretend to insinuate all competitors were gobbled up by mergers, but that the good ones, the ones with true innovation and respect within their business sphere, were gobbled up due to an economic climate of deregulation. However, there are company’s which self-destruct due to a lack of innovation, or a bad business plan, or maybe other reasons related to bad management practices. See (1992 Horizontal Merger Guidelines)

As economic cycles continue, as in mergers, so will regulation cycles continue creating the cycle-begetting-a-cycle acronym? This phenomenon can be seen as this administration stretched its regulatory authority due to perceived imbalances in competitive forces driving medical insurance markets. The same can be seen happening in technology sectors like broadband as referenced in new Net Neutrality and Data Roaming rules. Ways to end these cycles, or reduce them, is to rely on natural market competition, where the scales are tipped only to the most innovative and efficient companies within each market.

Mergers and Acquisitions Beget More Regulation
Mergers and Acquisitions Beget More Regulation Leonard Grace (270 Posts)

Founder of Broadband Convergent, a Broadband-Mobile-Cable-Wireless-Telecom market website focused on highlighting industry news and strategic issues within technology arenas. Highly researched and experienced insights and trends both inform and enlighten readers on current industry convergence of Broadband-Cable-Mobile-Wireless and Telecom Sectors.

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