EDITORIAL: If businesses don’t clean up, the government

0

Growth advocates generally agree that mergers and acquisitions are economically beneficial. They often lead to productivity gains and lower prices, and eliminate layoffs that increase shareholder value. All good things.

That’s not to say that economic progress has no downsides. Across America, communities are still waiting for the new industries they believe will replace those that left and took their jobs to Mexico and Asia.

It happened because Washington policymakers used tax rules, wage laws, environmental and safety regulations, subsidies, and trade debates to incentivize, perversely or not, American companies to relocate. . As they led us towards globalization, the little guy was left behind.

He still is. Now the problem is consolidation. In April 2020, T-Mobile partnered with Sprint to become the nation’s third-largest wireless company. It took a while, and while selling the deal to the Federal Communications Commission, which had to approve it before it could go ahead, T-Mobile CEO John Legere sent a letter saying that the combination of companies would not lower customer rates. increase and that the “New T-Mobile” would commit to “the same or better price plans for services than those offered today by T-Mobile or Sprint”.

It didn’t work out that way – something senior Sprint executives may have known was the case even while the deal was under review. According to evidence presented by a coalition of state attorneys general who sued to prevent the merger, Sprint’s chief marketing officer texted a colleague suggesting “the deal could mean a $5 raise per month of the average revenue per subscriber”.

It’s not a lot, but it’s not nothing. There’s no evidence that T-Mobile knew about it, but the idea that the other merger partner at least suspected but didn’t tell regulators puts those kinds of deals, which are supposed to improve good -being consumers, in an uncomfortable light.

Too little thought was also given to what the merger would do for small and medium-sized businesses, dealers and vendors already in partnership with constituents. Prior to its approval, the two companies made sweet but ultimately empty promises to them, particularly about how the merger would not affect the growth and viability of their businesses. Uh-huh.

In hindsight, all there is to it at this point, some now suspect that T-Mobile and Sprint convinced their partners to agree to the merger, then coerced Sprint dealerships into accepting new unfavorable terms and forced to close their doors if they refused to comply. This violates standard business practices and, if so, has damaged the livelihoods of the little guys involved.

It doesn’t take much to see how things like this fuel the resentment that drove support for former President Donald Trump’s protectionist economic policies. Workers may not expect the government to protect their jobs, but they certainly do not want it to be complicit in the disappearance of those jobs. The sour taste left by the Sprint-T-Mobile merger, fueled by a lack of concern on the part of regulators for the downstream damage it could cause, is easily explained by opponents of the free market system because the common exploitation by the large enterprises of the worker.

There is a fever building in Congress right now to bolster federal regulatory power to rein in big business. Business leaders must resist, first by cleaning up their act. They don’t want government to tell them right from wrong and we don’t want government bureaucrats to decide that. If they are not acting fairly throughout the supply chain, many federal regulators would be happy to intervene. It will do nothing to help economic growth, consumers or the integrity of the US market.

Share.

Comments are closed.