[00:03.83]2001 Passage4

[00:06.05]The world is going through the biggest wave of mergers

[00:08.96]and acquisitions ever witnessed.

[00:11.59]The process sweeps from hyperactive America to Europe

[00:15.52]and reaches the emerging countries with unsurpassed might.

[00:20.45]Many in these countries are looking at

[00:22.57]this process and worrying:

[00:25.00]"Won't the wave of business concentration turn into

[00:28.42]an uncontrollable anti-competitive force?"

[00:32.85]There's no question that the big are getting bigger

[00:36.08]and more powerful.

[00:37.89]Multinational corporations accounted for less than

[00:41.22]20% of international trade in 1982.

[00:46.56]Today the figure is more than 25% and growing rapidly.

[00:52.61]International affiliates account for

[00:55.24]a fast-growing segment of production in economies

[00:58.35]that open up and welcome foreign investment.

[01:02.90]In Argentina, for instance,

[01:05.10]after the reforms of the early 1990s,

[01:08.33]multinationals went from 43% to almost 70%

[01:13.27]of the industrial production of the 200 largest firms.

[01:18.52]This phenomenon has created serious concerns

[01:22.05]over the role of smaller economic firms,

[01:25.40]of national businessmen and over the ultimate stability

[01:29.42]of the world economy.

[01:31.97]I believe that the most important forces behind

[01:34.69]the massive M&A wave are the same

[01:37.62]that underlie the globalization process:

[01:40.85]falling transportation and communication costs,

[01:44.43]lower trade and investment barriers

[01:47.15]and enlarged markets that require enlarged

[01:50.37]operations capable of meeting customers' demands.

[01:55.03]All these are beneficial, not detrimental, to consumers.

[01:59.44]As productivity grows, the world's wealth increases.

[02:03.87]Examples of benefits or costs of

[02:06.59]the current concentration wave are scanty.

[02:09.72]Yet it is hard to imagine that the merger of

[02:12.64]a few oil firms today

[02:14.76]could re-create the same threats to competition

[02:17.88]that were feared nearly a century ago in the U.S.,

[02:21.52]when the Standard Oil trust was broken up.

[02:25.15]The mergers of telecom companies,

[02:27.57]such as WorldCom,

[02:29.08]hardly seem to bring higher prices for consumers

[02:32.41]or a reduction in the pace of technical progress.

[02:36.54]On the contrary, the price of communications

[02:39.47]is coming down fast.

[02:41.79]In cars, too, concentration is increasing

[02:45.62]--witness Daimler and Chrysler,

[02:48.44]Renault and Nissan--but it does not appear

[02:51.77]that consumers are being hurt.

[02:54.70]Yet the fact remains

[02:56.11]that the merger movement must be watched.

[02:58.83]A few weeks ago, Alan Greenspan warned against

[03:01.95]the megamergers in the banking industry.

[03:04.79]Who is going to supervise,

[03:06.81]regulate and operate as lender of last resort with

[03:11.04]the gigantic banks that are being created?

[03:14.56]Won't multinationals shift production

[03:16.79]from one place to another

[03:19.01]when a nation gets too strict

[03:20.72]about infringements to fair competition?

[03:24.09]And should one country take upon itself

[03:26.70]the role of "defending competition" on issues

[03:29.32]that affect many other nations,

[03:31.85]as in the U.S. vs. Microsoft case?