Why merger can be a dirty word when it comes to our inflation problem

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It’s the great number of our industries dominated by just a few firms that makes us especially susceptible to the inflation surge we’re struggling to get back under control.

Nothing excites the business section of this august organ more than news of another merger between two public companies. “Merger” is the polite word for it; usually the more accurate word is “takeover”.

But mergers can do serious economic harm when firms are motivated by a desire to squeeze competitors out of the market and so capture a larger share of the particular market. Fine. Trouble is, reformers have been batting for about 50 years to get effective restrictions on the ability of Australian companies to proceed with mergers designed to limit competition and enjoy excessive pricing power.

As well, profit margins had worsened and “monopsony hiring power” – few employers in an industry – was a problem in many industries.

 

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Why merger can be a dirty word when it comes to our inflation problemIt’s the great number of our industries dominated by just a few firms that makes us especially susceptible to the inflation surge we’re struggling to get back under control.
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