In this article the author makes a very enlightening summary of corporate concentration during 2006, and how this affects our lives as simple citizens even though we think its something happening far away
by Silvia Ribeiro
Corporate concentration through global mergers and acquisitions reached a record at the close of 2006. In our daily life this means that companies are becoming ever fewer but also ever larger with greater power to impose their products and norms of consumption on us, dictate labour conditions (and unemployment) and exercise every kind of pressure on legislators, governments or international institutions so as to achieve the rules and legislation they consider necessary. What they cannot achieve through market mechanisms they can impose through laws favourable to them as has happened on many occasions in the year just past as well as previous ones.
According to the market analysis firm Thomson Financial, the total value of business mergers and acquisitions in 2006 reached US$3.79 trillion (1) globally which means an increase of 38% over this type of transaction in 2005. According to another firm, Dealogics, the total value may be even more, reaching US$3.98 trillion.
The phenomenon of corporate concentration is not new. On the contrary, it is part of capitalism's intrinsic logic : businesses eat each other up so as to eliminate competition and better control prices as well as markets, and too workers and consumers who have progressively fewer choices. In the decade from 1990 to 2000 the rhythm of mergers and acquisitions accelerated in a way never seen before, starting out in 1990 with a total value of US$462 billion. and closing the year 2000 with an incredible spike of US$3.5 trillion, multiplying the initial value 7.5 times
That decade saw mergers and acquisitions between the giant oil companies (Chevron+Texaco, Exxon + Mobil Oil, BP + Amoco, Total+Petrofina+Elf), which made up an important percentage of the total volume of this type of operation. However, they were exceeded by the combined volume of acquisitions between telecommunications and high-tech companies. These were responsible for the spike in 2000.
The new record of 2006 surpasses the level of 2000. Although analysts indicate that this time the volume is spread over more industries, again one finds the telecommunications sector among the principal actors with the acquisition of BellSouth by AT&T along with the high-tech sector (computing, Internet and electronics) followed now by the misnamed "life" technologies or bio-technologies.
Among the keynote transactions of 2006 figure the purchase of YouTube by Google, a quiet giant that has much more influence in our lives than perhaps we realise. YouTube is a well-known site worldwide where one can see and upload videos to be seen by many other users. In many cases it is the only distribution source available apart from the telecommunications monopolies. Google's first action when it bought YouTube was to erase more than 30,000 videos from the site, alleging this was to protect the intellectual property of interested parties, marking incidentally that Google is a Big Brother serving the system.
In the "life industries" sector the most important deal was the purchase of the Biomet company bought by an investment combine including the Blackstone Group and the Texas Pacific Group. This acquisition is important for various reasons. It marks a trend among private investment groups competing for acquisitions : one is not dealing only with competition among corporations within the sector, but rather with investment groups that simply rate the deal, they do not care about the business itself, only its profit potential. In that light, it is significant that Biomet is a business dedicated to the sale of medical prostheses, several of which stem from the use of bio-nanotechnology. Beyond whether these prostheses might help whoever needs them rather than cause new problems, in this context they indicate an industry trend to invest aggressively in "improving human performance", in other words, the definition by the industry of who can (who ought to?) be "improved", opening up a new gap between those who can pay and those who cannot.
In this sector another important acquisition was that of the seed business Delta and Pine by Monsanto. Although smaller in volume it is tremendously significant : Delta and Pine was the biggest cotton seed business in the world, so Monsanto now also takes control in that area. But furthermore, Delta and Pine is the creator of the "Terminator" technology to make suicide seeds incapable of reproducing themselves. Now Monsanto is the biggest seed business in the world and also owns the patent on suicide seed which all growers have to buy from it each year
Although the examples are various, in the end they come to the same thing : an increasingly disembodied attempt to control us, to increase the profits of progressively fewer but ever more powerful entities.
Silvia Ribeiro is a researcher with the ETC Group (www.etcgroup.org)
Translation copyleft by Tortilla con Sal
Article published originally in Spanish in La Jornada, January 23, 2007.
1. Silvia's original article in Spanish uses the European billion (a million million) which is a US trillion.