Anti-Monopoly Rules Don’t Apply to Winners

A couple of examples in the news recently demonstrate clearly how another myth of capitalism doesn’t work. Big kafuffle because two of the major players in Canadian Telecom want to merge. The Government Departments that Pretend to Control Big Business jumped into action and held their meetings. Recommendations from everyone came down that this joining will harm the competitive climate in the business. A rather foregone conclusion, it seems. However, indications tell us that the merger is going to be approved anyway. One would be justified in wondering whether the laws of the business jungle apply to everyone except the Winners, who are above all that.

How Does That Work?

Everybody has known since the dawn of economics that monopolies are bad for everyone except the Winners at the game. That is the one piece of wisdom the Winners in the big companies have found it impossible to hide. So, we have the aforesaid government departments and powerful legislation to regulate monopolies. It makes one wonder; how were the Economic Leaders of the Free World so lax as to allow such a law? An expression about pulling the wool over the eyes comes to mind.

However

Somewhere in that mass of legalese is a clause that makes allowances for “extraordinary efficiency.” This bit of legislative sleight of hand suggests that if the merger creates a great deal of efficiency in the business, it should be allowed to go ahead anyway, despite the fact that it creates a monopoly.

Wait a Minute

Monopolies are a Bad Deal for consumers because they allow individual companies to raise prices in an uncontrolled manner. So too many big companies merging makes them too successful. However, if the merger makes them exceptionally successful, then it’s all right?

Let me translate. A monopoly is bad because it allows one company to be too successful. However, if the merger makes the new company exceptionally successful, then it’s okay. Winners take all.

By the Law of the Jungle

Decoded completely: there are really smart rules that no one should break, except the Winners who are really good at breaking the rules. After all, that’s how you get to be a Winner.

The Bottom Line

So, we have huge grocery chains making record profits in a time when food prices are going through the roof. Their CEOs claim there’s “no connection.” We have telecom giants wanting to increase their monopolies at a time when Canadian consumer prices are some of the highest in the world. But it “won’t make any difference.” We have big banks making huge profits in a time of high inflation. I wonder how that works?

Sounds like Capitalism is forging ahead just like the Winners want it to.