In last night’s GOP debate, Carly Fiorina spoke twice about companies merging to have more clout with the government. This morning CNBC was reporting that drug manufacturers Pfizer and Allergan are in friendly merger talks. If this deal comes to pass, the combined company would be the world’s largest pharmaceutical company.
With the recent focus on drug costs, this move makes sense. With increased complaints about the consumer costs of medicines, the federal government will likely seek more control over drug manufacturers. The larger the drug company, the more power they could have to influence the legislative process in their favor. This is exactly what Fiorina meant when she talked about crony capitalism in government.
You can’t blame businesses for doing what is best for their bottom line. They are in business to make money for their owners/shareholders. But they wouldn’t need to look for protective strategies like mergers if the government did not continually look for ways to regulate (i.e. interfere with) business practices.