Economics for the Earth Program
McMergers
The Big
Get Bigger
Nineteen ninety-eight
was the year of the mega-merger. Mergers valued at $2 trillion were
announced last year worldwide — $1.6 trillion in the US alone — shattering
all previous records. From giant car companies like Chrysler and
Daimler-Benz, to major oil concerns like British-Petroleum and Amoco, big
corporations got even bigger in their quest for profits in a global
marketplace.
What does this increased concentration of economic power mean for citizens and the environment? Government oversight of mergers has traditionally been based on two concerns: that giant companies would have too much political power, and that too few large companies would monopolize markets and boost consumer prices. Regulators and courts have recently focused almost entirely on competition and prices. The political power of big companies has slipped off the antitrust radar screen, which is unfortunate given that the American public is still concerned about how corporations unduly influence the political process. The proposed Exxon/Mobil merger is a good example — it would recreate a big chunk of the old Standard Oil monopoly and validate the long-standing public concern over the size and power of corporations.
Currently,
anti-trust law completely ignores environmental protection. A recent deal
for the government to buy parts of the Headwaters forest in California
(the only remaining stand of redwood trees in private hands) illustrates
this point. The controversy over this forest — which includes citizen
blockades, and the death of an activist last year — all derives from a
1985 buyout of Pacific Lumber by Charles Hurwitz, a Houston-based
financier. Hurwitz teamed up with junk bond king Michael Milken and bought
Pacific and the Headwaters, racking up $750 million in debt in the
process. To pay off the debt, Hurwitz doubled the rate of logging in the
Headwaters, and environmentalists and the government have struggled to
save the vital redwoods ever since.
Currently, The Federal Trade Commission only considers marketplace competition when evaluating mergers for approval — not environmental or human rights issues. Friends of the Earth believes that the government should play a much more aggressive role to make sure that mega-mergers do not compromise environmental health or human safety.