November 2015        

Mega-mergers and monopoly capitalism

Nicola Lawlor

A definition of a “mega-merger” is “the joining of two large corporations, typically involving billions of dollars in value.” The mega-merger creates one corporation that may maintain control over a large proportion of the market within its industry. Mega-mergers occur through the acquisition, merger, consolidation or combination of two existing corporations. They differ from traditional mergers because of their scale.
     Socialist Voice has on many occasions commented on mergers and the increased monopolisation within finance, pharmaceuticals and the technology sector and has in general drawn attention to the defining feature of monopoly within the system. Concentration, centralisation, stagnation and crisis all drive the ever-increasing monopolisation of production and also the “wasted” capital investment, such as sales and advertising.
     In October we saw two significant mega-mergers, the first being Dell and EMC and the second being AB Inbev (Budweiser) and SAB Miller (Miller).
     The money amounts are staggering. Dell is to purchase EMC for €67 billion, making it the largest purchase or merger ever in the technology sector. Dell is the world’s third-largest computer manufacturer; EMC is a data storage and software giant, the biggest company in the external storage market, with a market share of about 30 per cent. Both are American transnational corporations. Together they employ about five thousand workers in Ireland. This merger will make the giant the biggest privately owned technology company in the world.
     In the food and drinks industry, Budweiser and Miller are already the biggest brewers in the world, and so this will make them significantly bigger than any rivals. The $68 billion deal will create a company with an annual turnover of close to $250 billion, which will profit from the sale of three out of every ten beers sold globally.
     Both these deals make a mockery of the claims of “experts” and politicians about the “competitive” capitalist system and how competition provides quality products at reduced prices for customers. They shatter conventional economic models that rely on assumptions of competition and the free market.
     The ever-increasing monopolisation of goods and services allows transnational companies to profit from cheap labour all over the world while determining their desired price. It also facilitates the waste of billions in pointless advertising and market research.
     More of these deals will no doubt be on the way as profitable investment opportunities shrink and capital continues to concentrate in fewer and fewer corporations.

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