from general electric - baker hughes to at&t - time warner , a flood of new mergers are facing regulatory scrutiny. they may face a new wrinkle when they head to washington<u+2014>how the deals affect workers. typically the regulatory battle is fought over competition, meaning whether customers would pay higher prices after a deal. speaking last tuesday, at&t chief executive randall stephenson said at the wsjdlive conference that his company<u+2019>s proposed merger with time warner would lead to increased competition in the cable television market. prices, he said, would go down, not up. mr. stephenson may be fighting the wrong war. on the same day, the white house put out a news release <u+201c>announcing new steps to spur competition in the labor market and accelerate wage growth.<u+201d> the release cited a report by the council of economic advisers that argued that there needed to be more competition for the hiring of workers by businesses. companies considering mergers would be wise to pay attention to it. the election has highlighted a longstanding trend: the share of u.s. income going to workers has fallen, while the share going toward corporate profits has risen. it is part of why middle-class incomes after inflation are still below where they were in 1999. rising market concentration may be partly to blame . large companies represent a larger share of the economy than they once did, and mergers have played a role in this. as of last year, firms with 1,000 or more employees accounted for 40% of u.s. private-sector employment, according to the labor department. that compared with 36% two decades earlier. in another sign of rising industry concentration, in most industries the share of revenue going to the largest companies has risen. the number of companies listed on the u.s. stock market has fallen steadily since the late 1990s. companies aren<u+2019>t just sellers of goods and services, but buyers, too. if they face little competition from other buyers, the prices of what they purchase<u+2014>including labor<u+2014>can get driven lower. the extreme version of this, where there is just one buyer and many sellers, is called monopsony. it is the opposite of monopoly, which is one seller and many buyers. the brief the white house council of economic advisers published tuesday argues that labor market monopsony reduces <u+201c>wages, employment, and overall welfare,<u+201d> and then lays out the evidence for why it might be having an effect in the u.s. labor market mobility has fallen, for example, with workers less likely to change jobs, and less likely to move to get a new one. one factor behind this trend, which was under way long before the recession sent <u+00a0>jobless rates sharply higher, might be that workers have fewer labor market options. the trend could also explain why recent minimum wage increases haven<u+2019>t led to the types of job and hour reductions that economists would normally expect. if employers were able to underpay workers then modest increases in pay would only bring wages closer to where they should be. there are secondary effects to the concentration in industries. if big companies can use their buying power to squeeze suppliers then the workers at those companies could be hurt. indeed, in september renata hesse, the chief of the justice department<u+2019>s antitrust division, said that a merger <u+201c>that gives a company the power to depress wages or salaries or to reduce the prices it pays for inputs is illegal.<u+201d> if this interpretation is used to block a deal, companies could challenge it just like they do when regulators come out against deals because of competition in what they sell. if hillary clinton wins the presidential elections, these concerns will likely be reflected in her administration<u+2019>s approach to mergers, says new york university school of law professor christopher sprigman, a former antitrust lawyer at the justice department. among her advisers, <u+201c>there is a bunch of thinking going on in the role of competition enforcement in revitalizing the labor market<u+2019>s part in the economy,<u+201d> he says. the bar for mergers may be about to get a lot higher. write to justin lahart at justin.lahart@wsj.com
big mergers may face a higher bar in washington  - wsj
justin lahart