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Taming Giants

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Halliburton-Hughes may have had a nice ring to it, but the Department of Justice decided Wednesday that the planned merger of the world’s second- and third-largest oil field services companies was simply not meant to be.

Specifically, the prospect of Halliburton and Baker-Hughes combining into a single company threatened to violate national antitrust rules, which are supposed to prevent the creation of monopolies that can undermine a free marketplace.

But this move looks a bit like the Justice Department is trying to make up for lost time. We’re well into an age of mergers. Since 2008, domestic firms have engaged in consolidations worth $10 trillion. As The Economist pointed out last month, these deals have reduced the number of players in the market, leading to a “corrosive lack of competition.”

The supposed creative destruction of capitalism has cooled. Large companies today have a way of lasting longer and making more money than they did in the past.

Record-high profits should be attracting more upstarts that can outmaneuver or undercut successful corporate giants, but that simply isn’t happening as it used to. The big guys are throwing around their weight to keep competitors out of the game.

It isn’t just an issue of questionable business practices. Companies currently spend $3 billion lobbying in the U.S., a number that has grown by one-third over the past decade. A complex web of regulations, tax codes and licensure rules, easily navigated by in-house attorneys, often work to keep out upstarts while promoting incumbents.

Our elected officials can do a lot to reheat an increasingly stagnant marketplace, from paring down unnecessary regulations to bolstering anti-trust rules.

Everyday people can also take matters into their own hands by choosing to shop at small and local businesses.

The business of America is business, but the consolidation of wealth and power poses a grave threat to a free market.


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