Advice For Your Next Merger

Moneybox
A blog about business and economics.
Dec. 22 2011 3:34 PM

Advice For Your Next Merger

After reading my colleague Will Oremus' piece on the AT&T/T-Mobile merger, I wanted to throw in an observation about the fact that "[h]oping to secure federal approval for a deal that raised obvious antitrust flags, AT&T splashed $16 million on lobbying and $2 million on campaign contributions," namely that in a weird way AT&T's political strategy undermined its legal strategy here. 

One key point here is jobs. If you want to make members of congress and the public like you, saying "I want to do this merger so I can lay off a ton of workers" is not a great strategy. But if you want to persuade an anti-trust economist that your proposed merger should be approved, this is in many ways exactly what you want to say. That's because the economist is going to assume, in the first instance, that you're not just making a huge blunder. You want to undertake the merger, presumably, to make more money. Is the plan to make more money by stifling competition and screwing consumers? If so, that's a reasonable plan but not one the Justice Department wants to approve. Something like "if I combined these two firms, I'd be able to lay off a bunch of back office workers" is a perfectly valid, non-monopolistic business strategy. The fact that AT&T was running around claiming the merger would be a net job creator, by contrast, sounds good as a PR strategy but raises red flags.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

Stop Panicking. America Is Now in Very Good Shape to Respond to the Ebola Crisis.

The 2014 Kansas City Royals Show the Value of Building a Mediocre Baseball Team

The GOP Won’t Win Any Black Votes With Its New “Willie Horton” Ad

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

One of Putin’s Favorite Oligarchs Wants to Start an Orthodox Christian Fox News

These Companies in Japan Are More Than 1,000 Years Old

Trending News Channel
Oct. 20 2014 6:17 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Outward
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Technocracy
Oct. 20 2014 11:36 PM Forget Oculus Rift This $25 cardboard box turns your phone into an incredibly fun virtual-reality experience.
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.