One of the features of capitalism is the growth of monopolies. As a result of their emergence either because of mergers or by the purchase of smaller companies, we end up having less competition and that results in higher prices and less innovation, leading to inferior products and services. The government’s anti-trust division is supposed to prevent monopolies but that long ago became a toothless tiger.
Last year, Justin Elliott of ProPublica wrote about what happened to the airline industry as a result of all the mergers. He writes about how the Obama administration, after initially vowing to oppose the merger of American Airlines and US Airways, suddenly did an about-face and let it go through, so that now travel in the US is overwhelmingly dominated by just four airlines.
It announced a settlement that allowed American and US Airways to form the world’s largest airline in exchange for modest concessions that fell far short of addressing the concerns outlined in the lawsuit.
The Justice Department’s abrupt reversal came after the airlines tapped former Obama administration officials and other well-connected Democrats to launch an intense lobbying campaign, the full extent of which has never been reported.
They used their pull in the administration, including at the White House, and with a high-level friend at the Justice Department, going over the heads of staff prosecutors. And just days after the suit was announced, the airlines turned to Chicago Mayor Rahm Emanuel, Obama’s first White House chief of staff, to help push back against the Justice Department.
As a candidate in 2007, President Obama pledged to “reinvigorate antitrust enforcement,” calling that the “American way to make capitalism work for consumers.” Hillary Clinton has recently made similar promises.
But the reversal in the American-US Airways case was part of what antitrust observers see as a string of disappointing decisions by the Obama administration.
John Oliver picked up on that story and on the deleterious effects of that and other mergers.