A nation that does not control its beer, does not control its future
The Justice Department has sued the Belgium brewing giant Anheuser-Busch InBev to stop its $20 billion acquisition of Grupo Modelo, the maker of such beers as Corona and Negra Modelo. If consummated, the deal between the world’s No. 1 and No. 3 beermakers would control 46 percent of the U.S. market.
Antitrust suits have been very rare over the past 30 years as the laws became more rococo and politicians, well lubricated by corporate money, were much less inclined to attempt to enforce them. Microsoft, at the time not playing the D.C. game, was an exception, and the company was not broken up. The result has been the rise of highly consolidated industries in such areas as media, energy, airlines, wireless telecom, railroads, satellite television providers, tire manufacturing and soft drinks. Did I mention finance?
In addition, regulators watched passively as Wal-Mart grew into a giant of such size that it gained control of the worldwide supply chain and pricing power over its rivals, playing a decisive role in the death of small, independent retailers. Now comes Amazon.com, which wants to go the Beast of Bentonville one better.
In all these cases, these quasi-monopolies and cartels have eliminated competition and choice, been a major force in slow job growth, wage stagnation and anti-union activities. Yet they often have kept prices down or even lowered them. Concentration was backed by studies from leading economists and prestigious business schools. “We’re competing against other giants in a world market,” the oligarchs said, and got their way. Nevermind that “bigness” eventually leads to grief even for the company or industry involved, as the mega-banks of Japan showed in the late 1980s.
Regulators and politicians, at least in America, saw that it was good. John D. Rockefeller and the robber barons from the turn of the 20th century can only look on with envy. They would especially be jealous of the way their successors have spent decades rewriting the law and rules to favor the big over the small, the corporation over the citizen or small-business owner, the investor over the wage-earner.
In the case of banking, we saw the results in the panic of 2008 and the vast treasure expended to save the Too Big to Fail. As for beer, InBev’s earlier acquisition of Anheuser-Busch seemed questionable. Now the notably timid Obama Justice Department is trying to cut them off. I think we know how this will turn out. Too Big to Swallow? Nope.
And Don’t Miss: The globalization god has feet of clay || Clyde Prestowitz/Foreign Policy
Today’s Econ Haiku:
A flawed crystal ball
The Dow in January
Can’t even see March