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This Consolidation Wave Could Get Out Of Hand


International Editorials

THIS CONSOLIDATION WAVE COULD GET OUT OF HAND

After the wild excesses of the 1980s, the current wave of mergers and acquisitions naturally invites concern. Name an industry, be it defense, drugs, health care, telecommunications, banking, or retailing, and there is consolidation.

Should we worry? The barbarians are not again at the gates, at least not yet. These deals are not being driven solely by financial gimmickry. Constructive forces are at work, from global competition to the end of the cold war to health-care cost-cutting.

Yet vertical integration and oligopoly pricing power are fearsome economic forces. The histories of both the defense and health-care industries are replete with examples of overcharging. Cable, cellular, and phone companies all have monopoly backgrounds. Consolidation may prove so tempting that some companies might take unfair advantage of their market power.

Assistant Attorney General for Antitrust Anne K. Bingaman has been more activist than her predecessors. Now is time for her to decide whether the recent trend toward megadeals and industrial concentration is getting out of hand.


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