In London alone, according to Acquisitions Monthly, dealmakers raked in a record Pounds 1.3 billion in fees for advising on some 1,801 deals. The financial-services industries are leading the consolidation wave, with Morgan Stanley buying Dean Witter, First Union taking over Corestates, and Union Bank of Switzerland merging with Swiss Bank Corporation. So nobody can accuse the anti-trust authorities of preventing consolidation just for the fun of it. But there is no question that they are looking harder at some deals that come across their desks for approval. Mergers, they argue, are necessary if firms are to benefit fully from the economies of scale available only to the largest companies.
Globalisation means companies can now trade all over the world.
To do so, they need to be big enough to serve customers on a global basis, and to spread their marketing and other costs over a larger volume of sales. Perhaps even more important, bigger firms have an easier time raising capital. This is all true, but not necessarily decisive to those entrusted with enforcing competition policy in Washington, Brussels, London and elsewhere. For their job is to stop mergers that may sub stantially lessen competition. Such harm to competition could come if a merger reduces the number of players in a market sufficiently to make it easy for them to co-ordinate their pricing and other policies or, worse still, gives the merged company sufficient power to raise prices on its own.