What corporate mergers mean for students
February 3, 2013
A merge is a marriage of two businesses. The latest nuptial is between two major international companies: InBev and Grupo Modelo.
You’ve heard of them right? No? Well, I bet you know their products.
InBev, the producers of the beers Busch and Budweiser, have negotiations with brewer Grupo Modelo, producers of Corona, as part of a proposed $20.1 billion merger.
Although the combination of America’s two favorite brewers might seem like a match made in heaven, consumers may be taking a major hit.
In fact, no merger can be seen as beneficial for anyone but the companies involved.
In an effort to stop this particular merger, the United States Justice Department has filed a lawsuit, according to a Thursday article from USA Today.
According to the article, the government says that “the merger would put too many top beer brands in the hands of a single corporation, limiting competition.”
Well, it makes sense, doesn’t it? Eliminating competitors by working together and making a mega company really puts into perspective the phrase, “If you can’t beat ’em, join ’em.”
But what does that mean for us? Generally, that means higher prices because of failing businesses according to Time Magazine.
We can see this in many industries across the market.
An episode of 60 minutes in October 2012 shone light on the Italian company Luxottica, which has a big time monopoly on the glasses industry. As the owner of brands like Ray-Ban, LensCrafters, Pearle Vision and even Target Optical, they had almost no competition.
What happened when the popular brand Oakley got in the way? Luxottica bought them out, too.
The consequence of Luxottica’s reign is that a pair of Ray-Bans that would have cost $29 in 1999 can now set you back $150 or more. And when you walk into LensCrafters, don’t expect to buy anything for less than $200.
Has the quality changed? No. The simple fact is that companies like Luxottica have hotels on both Boardwalk and Park Place and are waiting for you to roll.
That’s right: Mergers suck.
The airline industry especially has been riddled with merger deals. According to Janet Al-Saad of mintlife.com, we can expect prices to rise in this industry.
Now, whether the InBev-Grupo Modelo merger will doom the beer industry to the same fate is yet to be seen, but the simple fact is that mergers in business are not to your benefit.
It may well be that the next time you kick back at the bar you may be emptying your wallet faster than usual.
Do I agree with the government getting involved in private corporations? Not especially; however, that‘s not the point.
As companies are making big bucks with almost no competition, we are the ones who pay–literally.
As college students, money is a big part of our lives simply because most of us aren’t lucky enough to have any. So when two companies hook up, it is in our best interest to pay attention and hope for a divorce.