Although
there has been slow down in wave of corporate mergers and a proliferation of strategic
partnerships among corporations in the past few during the world economic crisis, market concentration giving a few producers
or suppliers an undue amount of influence of market continues to cause alarm.
The annual value of corporate mergers has risen to a 100-fold during the past
two decades, reaching a cumulating $15 trillion in 2006. 32,000 deals were
announced in 2006 alone; triple the numerator a decade ago and more than 30
times in 1986. Mergers across national boundaries rose even more strongly than
that of all mergers. While cross border mergers were typically below 20 percent
of the value of all mergers in the early 1980s, today they constituted more
than one-third in 2006. The member of cross-border deals valued at more than $
1billion rose to100 in 2006 from just 39 in 1998. In fact, cross-border mergers
have been the main driving force of foreign direct investment in recent years.
This means that considerable position of private capital flows goes simply to
changing ownership of existing factories and other business. While acquisitions
imply a long-term investment commitment, most others imply little more than a
procedure to asset-stripping–retaining the most valuable parts of company and
closing or selling off other parts. Recent data indicate that such corporate
mergers have instead of benefitting the people have meant to more concentration
and market power which translates into political influence and reckoning of
labour's bargaining power. Although there has been a significant decline in the
number and volume of mergers and acquisitions, concentration of market and
wealth continues to be a worrisome phenomenon. Recently many Indian Corporations have
resorted to acquisition of foreign companies. It is not a good augury.
When there is large-scale unemployment, especially among educated youth, it is
unwise for Indian companies to invest huge amounts in acquiring assets abroad.
When the government is going all out to woo
foreign direct investment even
against public sentiment and opposition from all quarters such as
allowing 51% FDI in multi-brand retail trade, it is unwise to allow Indian corporations to
invest huge amount for acquisition of foreign assets.
Dr.C.Murukadas,
The Times of India, Nov.8, 2012
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