Oligopoly, Inc. 2005: New Report on Concentration in Corporate Power

Readers of OTC will be interested in ETC Group’s new report on concentration in corporate power, Oligopoly, Inc. 2005. ETC’s report provides a sector-by-sector analysis that examines the market share of the top 10 companies in the following sectors: Big Pharma, animal pharmaceuticals, biotechnology, pesticides, food and beverage processing and global grocery retailers. Oligopoly, Inc. also looks at the emerging fields of nanotechnology and synthetic biology.

The findings are not surprising. Corporate concentration – not only in food and agriculture, but in all sectors related to the products and processes of life – has increased remarkably since ETC Group’s last review two years ago. Since then:

• the world’s top 10 seed companies have increased their control from one-third to one-half of the global seed trade;
• the top 10 biotech enterprises have raised their share from just over half to nearly three-quarters of world biotech sales;
• the market share of the top 10 pesticide manufacturers rose modestly, from 80 to 84%, but industry analysts predict that only three companies will survive the next decade;
• the top 10 pharmaceutical companies control almost 59% market share of the world’s leading 98 drug firms (previously the top 10 accounted for 53% market share of 118 companies).

It’s no secret that transnational corporations wield unprecedented power to shape social, economic and trade policies. Today we are witnessing ever more concentrated control over – not only the food system – but the products and processes of life and the fundamental building blocks of nature.

At the beginning of this decade, many analysts assumed that the hectic pace of corporate mergers seen in the ’90s was over and never likely to be repeated. One reason for this assumption was that corporate size (and market share) had ballooned to a scale that even notoriously myopic regulators could no longer ignore. Secondly, of course, the dot.com bubble burst brutally, dampening investor confidence and the enthusiasm of venture capitalists to bankroll either new technologies or takeovers.

Beginning in 2004, bubble concerns abated as more and bigger mergers were announced. In 2004, the global value of corporate mergers and acquisitions climbed to $1.95 trillion – a 40% jump over the $1.38 trillion in 2003. Combined sales of the world’s 200 largest corporations accounted for 29% of world economic activity in 2004. Due to intra-firm trade, however, what looks like buying and selling between countries is very often the redistribution of capital among subsidiaries of the same parent multinational corporation. The lightning flash of globalization has blinkered regulators anxious that their home-headquartered multinationals be competitive. Often overlooked is market dominance through intellectual property manipulation (such as recycling innovations to extend patent monopoly) and technology trading leading to global technology cartels.

As always, corporate dominance is mirrored by growing disparities between rich and poor, both within and between OECD nations and the South. The following are just a few indicators:

• Mainstream economists preach that capital always seeks the highest returns and typically flows from rich countries to poor ones – but The Economist notes that emerging economies sent about $350 billion to rich countries in 2004.
• The 400 richest people in America are collectively worth $1.13 trillion – more than twice the GDP of Brazil.
• America’s corporate executives now make more in a day than the average US worker makes in a year. In 2004, the median compensation of American CEOs increased 30%, to $6 million.

One of the first steps to reforming corporate power is to document the trends – and that’s the purpose of Oligopoly, Inc. But as one of the authors of Oligopoly, Inc. I’ve noticed that access to corporate intelligence is increasingly harder to come by. While annual reports and 10K forms are still freely available, many libraries can no longer afford to buy the most up-to-date market research reports. With increasing levels of corporate consolidation, a small circle of competing firms carefully “manage” information and decide what’s best for public consumption. Over the course of our research, we’ve noticed that some industry trade journals that survive on corporate advertisers (and subscribers) have stopped publishing industry rankings or critical analysis of industry trends. The editor of one trade journal told ETC Group that all information in her company’s magazine was copyrighted “and you will need my permission to use anything from the magazine.” One UK analyst refused to provide information due to “a potential conflict of interest between your organization and our client base.” Market research information abounds on the Internet, but most of it is proprietary and pricey.

Check out Oligopoly, Inc. and find out why corporate sources aren’t so eager to share corporate intelligence.

Posted December 19, 2005