Sure, that is a market with large amounts of geographic network effects. I already said that markets with large network effects could have competition problems.
IE, with air travel, on any given route between two cities, there might only be 1 or two airlines servicing it. So yes, thats a problem.
Most things that people spend their money on do not have much network effects, so my original point stands.
> to such an extent that only 14 car companies control 54 brands
So not a winner take all market then? Got it. I already said that it would be ridiculous to claim that a market would need to have 10,000 companies of equal size, in order to be considered "competitive".
So yes, I consider the car market to be fairly competitive, and not one where you only have "no choice".
> Fridges are another great example.
You just posted a link that shows that there are a bunch of competitors, and that it is not a winner take all market.
So I stand by my point that neither cars nor fridges are in any way similar to something like internet service, where someone might only have 1 or 2 choices, or something like the Google ads business, where Google has a huge amount of power in the market that is no way comparable to the fairly competitive car market.
I posit these markets only have many players because regulation prevents their consolidation.
Cars went from 54 to 14 establishing clear directionality and benefit. It's not going from 14 to 1 only because of laws against further consolidation in the space. Regulators would simply deny their request to consolidate further. Stopping at 14 isn't some magical constant or some natural end state.
My point is that the natural direction in each of these markets is consolidation, then at a point it hits a dead stop. Why is consolidation only useful up to a certain threshold? It's not. Regulation steps in and keeps it competitive.
> only because of laws against further consolidation in the space
No, because these markets don't have some huge geographic network effect.
The markets are pretty different than something like home internet service.
The traditional example being that of water pipes, where there is zero benefit to laying the pipes twice to a house.
You should be able to see how a situation where laying the pipes twice to a house is pretty different than a situation where there absolutely could be benefits to another car company being created, to manufacture new cars.
> Regulation steps
I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies.
Anti-trust law isn't really enforced even in obvious cases where it should be enforced these days , and yet I see a world where there is lots of new companies entering markets, and lots of competition, in most markets, despite regulators failing to enforce regulation in the exceptional and rare cases where it should be doing so.
It is quite clear that regulation is not stepping in, even in the obvious cases. So no, I do not believe that the non-existent enforcement of regulation is doing anything. Instead, we are living in a world that has lots of competition, despite the fact that the regulators aren't doing anything even in the blatant and exceptional cases where it should, such as in telecom/internet/app stores/ect.
> I am not sure how you can claim with with a straight face, that anti-trust laws/regulation is being strongly enforced these days, and that this is the reason why most industries are not turning into monopolies.
As I said, my analysis applies to companies that have demonstrated economies of scale.
Mergers are rejected all the time, and further, you can't discount the mergers that weren't requested in the first place because of the regulators.
I would say in the US mergers tend to skate through, but in if that company operates in other jurisdictions they need approval from all global regulators, and the EU has no such objections to saying no.
You haven't posited a theory at all for why consolidation is good up to 14 players in the automotive space but 13 is just a bridge too far. It's not. There's external pressure. Competition is bad for companies because it reduces margin. Consolidation removes competition and improves margins. That's just fact. Companies don't care about capitalism, competition or free markets. They care about making more money.
I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law.
Regulators are really not doing much regulating right now, on the anti-trust and anti-competition front, and regulators not doing much regulating in these new markets where they definitely should be.
I am not sure how you could possibly look at the current state of some of these rare expectations of monopoly behaving companies, and claim that regulators are doing their job.
> I would say in the US mergers tend to skate through
Well then this concession is good enough to support my point.
> You haven't posited a theory at all for why consolidation
Well I don't need to. All I have to do is point to the existence of lots of markets that are competitive, and point out that regulators that aren't regulating. The reason doesn't matter as long as I point to the clearly true fact that regulators aren't doing much regulating in some of these markets.
But, one possible theory is that consolidation also reduce competition, and can cause companies to stagnate, and can reduce innovation in that market. You would have to argue that no startups ever could succeed in the face of "scale" (something that is clearly not true. Startups suceed all the time), if you are going to argue that scale is such an overwhelming advantage that inevitably causes every single company in that market to join together.
Also, different companies run differently, and this can give them advantages in some things, and disadvantages in others, allowing them to overcome scale problems, due to the advantage/disadvantage of merely being different. Heterogeneity in companies allows them to target niches and stay in the market.
I’m sorry you’ve made a very uncompelling case for me. You fail to address the directionality inherent in all my data preferring to instead point at the current state as though it’s terminal and natural. I just don’t see it that way. Thanks for your perspective however!
My point was that once you reached a certain scale the US regulatory environment is less relevant than the strictest regulatory environment in which you do or hope to do business. It’s not sufficient for Ford and GM to merge with only the US gouvernements blessing as they do business in Europe and the EU would never permit it. They’d need sign off from the EU, US, CA, AU, CN, etc.
Source showing how weak EU anti-trust enforcement is
After doing more research, is clear that the EU is doing much less enforcement against merges than even I previously thought, and I am now going to claim that the EU regulators aren't doing much enforcement either.
Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value.
Furthermore, I can only find a single example, in the history of EU anti-trust law, of the EU blocking a US merger. And that was in 2001 regarding a GE acquisition.
If there is only a single example, in the history of EU anti-trust law, of the EU blocking a EU merger, a whole 20 years ago, then it is pretty clear that the EU is not doing much enforcement against US mergers.
So my point stands. You concede that the US is not doing much enforcement of anti-trust law. And the fact that the EU has only ever been successful in doing so a single time, 20 years ago, means that the EU is pretty irrelevant to this conversation as well.
> Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value.
Again, the number of blocked vs approved isn't particularly relevant. What matters is also the number that weren't tabled in the first place, and obviously, the number of things that didn't happen is a particularly challenging set to count. Companies aren't fond of public failure, and so they'll try and suss out whether regulators would be amenable to a merger before making it public.
6,000 vs 30 is a meaningless metric, because 6,000 small companies merging into 3,000 small/midsize companies isn't relevant to this discussion as it doesn't do much to alter the competitive landscape. 30 mega-caps merging into 15 giga-caps is what I'm talking about.
I'm not saying companies should never merge, that's fine, it's in their competitive interest to do so. Mergers are good for companies because they reduce competition and improve margins.
Again, what you haven't explained is why a small company merging into a small company is advantageous, a mid size into a midsize is advantageous, but a giant into a giant just wouldn't ever work. Of course it would work, the same dynamic continues to exist. Regulators are why.
T-Mobile just acquired Sprint, right? So we know there's certainly an advantage on the business front to consolidate these businesses. So why doesn't AT&T buy T-Mobile to form AT&T&T? Well, they tried in the early 2010s and the DOJ filed suit is why. [1] Further AT&T had to pay a huge amount of cash to T-Mo when it all unwound.
Even if you think that, the metric of only a single american merger ever being prevented, and it happening 20 years ago, is still pretty relevant.
If the regulators in Europe have only blocked a single merger in America, ever, then European regulators are simply not relevant to the conversation, and you have already conceded that American regulators aren't doing much.
You cannot handwave away the true fact that the EU has only stopped a single American merger, one time, 20 years ago. And that this is pretty good evidence that European regulators are not doing much to prevent American mergers.
> T-Mobile just acquired Sprint
Huh. And I guess European regulators didn't do anything about that, did they? In the clear and obvious cases of geographic network effects in the industry of Telecom, which I have already stated is one of the few exceptions where regulation is definitely needed (Telecom, has huge geographic network effects. It is the same problem as internet, or electricity, or water pipes, and I have already said that network effects are the one major area that consolidation will definitely happen), we see that European regulators didn't stop such a clear an obvious thing that should have been stopped.
> 6,000 small companies merging
Well, in one of the cases of large telecoms companies, such as t-mobile/sprint we see that it wasn't blocked!
> so they'll try and suss out whether regulators would be amenable to a merger before making it public.
Well they didn't stop the clear and obvious example that you just brought up regarindg T-Mobile/sprint. Looks like European regulators are doing much of anything.
So no, European regulators are not doing much of anything at all, to prevent American companies from merging, using an example that you brought up.
> Well, they tried in the early 2010s and the DOJ filed suit is why
As I said, before, businesses that have huge geographic network effects are one of the few exceptions where there is a huge advantage to consolidation. But even IN these clear and extremely obvious cases, only sometimes will regulators take action. But sometimes they won't either.
The fact that nobody blocked the t-mobile/sprint situation is clear evidence that regulators aren't doing much to stop mergers, even in the rare and obvious cases where they should step in.
All I'm saying is that mergers that are stopped aren't publicly reported for the most part. They do their due diligence, and if they don't think it'll go through they don't file. The only public failures are the ones where the companies failed to do their diligence on regulations in advance and wind up with egg on their faces.
But apparently the EU isn't actually stopping much of anything, as evidenced by the fact that the T-mobile sprint merger that you brought up went through, which is a clear an obvious thing that they should have stopped but did not.
If they failed to stop such an obvious case, then is strong evidence that they aren't doing anything.
But whatever. Going to move on from this thread because it is clear that you know that this example is a clear cut example of how the EU isn't doing much to regulate anything, which is why you completely ignored it.
The complete dodge on that shows that you understand how much it disproves your point, and shows that the EU isn't doing much, which is why you completely ignored it.
So that dodge is good enough evidence for me, to show me that you understand this.
Again you don’t know if that it’s the regulations stopping it or not because the existence of regulation may well dissuade them from filing in the first place. If they never filed them you’re not counting them yeah? To be clear I’m not saying you’re wrong, I’m saying that we have insufficient data to say conclusively.
All we know is there is clear pressure in industry to consolidate, that at some point they stop, and that regulations to preclude further consolidation exist.
Sure, that is a market with large amounts of geographic network effects. I already said that markets with large network effects could have competition problems.
IE, with air travel, on any given route between two cities, there might only be 1 or two airlines servicing it. So yes, thats a problem.
Most things that people spend their money on do not have much network effects, so my original point stands.
> to such an extent that only 14 car companies control 54 brands
So not a winner take all market then? Got it. I already said that it would be ridiculous to claim that a market would need to have 10,000 companies of equal size, in order to be considered "competitive".
So yes, I consider the car market to be fairly competitive, and not one where you only have "no choice".
> Fridges are another great example.
You just posted a link that shows that there are a bunch of competitors, and that it is not a winner take all market.
So I stand by my point that neither cars nor fridges are in any way similar to something like internet service, where someone might only have 1 or 2 choices, or something like the Google ads business, where Google has a huge amount of power in the market that is no way comparable to the fairly competitive car market.