This one statistic shows why the feds should block the AT&T-Time Warner merger
Fortune - 10/25/2016
John Kwoka, an economist at Northeastern University, recently published research that looked at more than 1,000 mergers over the past twenty years. Kwoka found that at least one-third of the ones he studied actually resulted in price increases of more than 10%, when controlling for factors like changes in input costs, shifts in demand, and other variables that can lead to price increases outside of changes in the competitive landscape. Kwoka found that a whopping 80% of mergers led to some price increase, with the average coming in at 7%.
Kwoka’s research is a damning indictment of the federal government’s performance in preventing price-increasing mergers, and could be used as justification in and of itself to crack down on mergers and acquisitions. Kwoka also found that when the federal government requires merging companies to divest assets, such actions had almost no effect in preventing price increases.