Big Mergers, Bigger Prices?

Key Concepts:

• M&A (Mergers and Acquisitions)
• Market Cornering
• Patents
• Pharmaceutical Industry
• Price Increases
• AT&T and Time Warner Merger
• Subscription Prices
• Cable Bundle Fees

M&A and Market Cornering: A Historical Perspective

The speaker asserts that M&A causing a market to get cornered is a rare occurrence in modern history. They challenge the audience to provide examples, suggesting that such instances are not readily found.

Chat GPT's Examples and Their Validity

The speaker then shares examples provided by Chat GPT when asked about M&A leading to market cornering. These examples include:

• Martin Shkreli's Turing Pharmaceuticals: Raised the price of Daraprim.
• Valeant Pharmaceuticals: Acquired smaller drug companies and increased prices significantly (over 3,000%).
• Allergan (Botox) acquiring the company that makes Juvederm (Cumra): Resulted in price increases.
• AT&T and Time Warner Merger: Led to increased subscription prices for Direct TV and HBO, as well as higher cable bundle fees.

The speaker questions the validity of the first two examples, pointing out that pharmaceutical companies often have patents, which grant them exclusive rights and limit competition. The speaker acknowledges that the Allergan example is "legit" because it involved buying a direct competitor.

The AT&T and Time Warner Merger: Price Increases

The speaker highlights the AT&T and Time Warner merger as an example where M&A led to price increases for consumers. Specifically, Direct TV and HBO subscription prices increased, and cable bundle fees also rose.

Conclusion

The discussion centers on whether M&A activities lead to market cornering and subsequent price increases. While the speaker initially claims such instances are rare, Chat GPT provides several examples. The validity of some examples is debated, particularly those involving pharmaceutical companies with patents. The AT&T and Time Warner merger is presented as a more concrete example of M&A resulting in higher prices for consumers.