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More Mergers

So, Verizon is buying MCI. And this is just weeks after SBC Communications decided to buy AT&T. And many people are feeling the affect of Cingular (a joint venture of SBC Communications and BellSouth Corporation) buying AT&T Wireless.

Now, I personally benefited from Cingular’s expansion; my cell phone has better reception and more features. And I’ll probably benefit from Verizon buying MCI, some improvement in my home phone or my DSL. But, they are going to let 7,000 workers go. Other such telecommunication buyouts resulted in similar layoffs. (This isn’t industry specific; David Lidsky commented on this aspect of the Procter & Gamble/Gillette merger.)

Whenever there are mergers or buyouts of such size the looming threat of “Omni Corp.” comes to mind. It has become an urban legend of sorts, the great fear of libertarians everywhere. What will happen when there are only three large companies providing a service? Then two, or one? Yes, there are anti-monopoly laws, and it will probably never get that far. But, it is still viable to worry what the playing field will look like under three companies, though. Corporate collusion, whether direct or indirect through a stagnating market, gives me pause. How fair and even will it be for consumers?

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