August 12, 1998
USA Today, August 12, 1998
This is the year of the mega-merger, with records being broken before the ink is dry on the previous one. The decision to combine Daimler-Benz and Chrysler two months ago was the largest industrial merger in history– until yesterday. Now we have British Petroleum and Amoco merging to form the biggest oil producer in the US.
Six thousand employees will be thrown overboard, but don’t expect any of these “efficiency” gains to show up in the form of lower prices to consumers. In fact the opposite is more likely, when the new giant flexes the economic muscle of its increased market power. The big winners are the investment bankers who brokered the deal and the stockholders, as evidenced by the soaring stock prices of both companies that greeted the announcement.
But there are worse problems with these deals: in particular, the concentration of political power that they produce. Consumer and environmental groups are already concerned that a wave of mergers in the oil industry could solidify the powerful anti-environmental alliance that these giants can mobilize around such issues as global warming.
It is also worth noting that these last two record industrial mergers combined American with foreign firms. These trends are often believed to be the inevitable result of such unseen forces as “technology” and “globalization,” but this not true. Our own government has been leading the worldwide effort by multinational corporations to rewrite the rules of the global economy in order to facilitate such deals.
One of these efforts is the Multilateral Agreement on Investment (MAI), which our government has been negotiating for almost three years. This agreement would initially include the 29 industrialized countries of the OECD (Organization for Economic Cooperation and Development), and then be opened to the rest of the world. It would create a host of new rights and privileges for international investors, and make it more difficult for governments to prevent or regulate international megamergers like BP Amoco or Daimler-Chrysler.
So long as our government continues to place the interests of multinational corporations ahead of the public interest, we can expect more such mergers, with similar results.