You’ve probably noticed some of your favorite brands disappearing from stores recently. That trendy clothing store you loved in college? Bought out. The hip cafe down the street known for amazing chai and samosas? Now owned by a restaurant conglomerate. It seems like everywhere you turn, small businesses are being gobbled up by bigger companies in India’s acquisition wave. At first, it may seem exciting to get popular brands under one roof. But look closer. These acquisitions often mean less choice, higher prices, and a troubling trend of big companies controlling entire markets. The little guys who brought personality and competition are gone. Variety is vanishing. And you, the customer, are left with fewer options and a hit to your wallet. India’s acquisition spree may be great for big business, but for the rest of us, the future isn’t looking so bright.
The Recent Surge in Corporate Acquisitions in India
The recent surge in mergers and acquisitions in India is alarming. Major corporations are buying up smaller companies left and right, limiting consumer choice and driving up prices.
Over the last few years, the number of acquisitions by Indian companies has skyrocketed. Small startups are being gobbled up by industry giants before they even have a chance to compete. Instead of taking risks and innovating, big companies are taking the easy way out by eliminating competition.
For customers, this means less choice and less bargaining power. With fewer options, you have to pay the price set by the company that controls the market. Some acquisitions even result in lesser quality products and services over time due to lack of motivation to improve.
The Competition Commission of India has raised concerns about how these deals threaten fair competition in the market. Despite this, acquisitions continue to rise each year as companies strive to dominate their industries.
While mergers and strategic alliances are common in capitalist economies, the pace at which they’re happening in India could do more harm than good. Instead of encouraging innovation, they’re being used by companies as a tool to maximize profits through limited choice and higher prices.
Overall,acquisition wave in india may be good for big business, but its a bad news for customers and the economy. The consolidation of corporations is moving India closer to a monopolistic system where a few large companies exert control over the market. If this trend continues, fair competition and consumer welfare seem destined to suffer.
How Acquisitions Limit Consumer Choice
When big companies acquire smaller ones, it often means less choice and higher prices for us consumers. Take the recent acquisition of Zomato by Uber Eats. Now we have one less food delivery service to choose from, and Zomato will likely raise their fees over time without the competition.
These kinds of buyouts and mergers are happening across industries in India, from retail to telecom to air travel.
As companies join forces, they corner more of the market and gain more control over pricing. Some major acquisitions threaten to create virtual monopolies in their sectors. The Competition Commission of India has warned that this trend could negatively impact competition and consumer welfare in the long run.
For customers, it translates into fewer options to choose from and less incentive for companies to keep prices low or offer the best experience. We are already seeing some brands hike up rates right after an acquisition. And when a company takes over, they often discontinue certain products or change policies in ways that benefit them, not us.
While acquisitions may sometimes drive more efficiency, innovation, or better service, they usually come at the cost of competition. The reality is that corporate mergers often do more for companies,the bottom lines than for consumers best interests. So next time you hear about a big acquisition affecting a service or product you use, brace yourself for the consequences to your wallet and options. The free market in India is consolidating, and w are the ones paying the price.
Higher Prices: The Hidden Cost of Less Competition
With fewer companies competing in the market, the pressure to keep prices low disappears. Companies that have gained a monopoly over a sector or region can raise prices without fear of losing customers to competitors. For consumers, this means higher costs of living and less choice in where they spend their money.
Take the example of airline mergers in India. As major airlines like Jet Airways and Kingfisher Airlines have folded or been acquired, passengers have seen ticket prices climb. The remaining airlines do not have motivation to lower fares or offer deals to attract customers when they dominate the market. This lack of competition allows them to raise rates to increase profits without repercussions.
The same scenario is playing out across various industries in India from telecom to retail. When large corporations acquire or force out smaller players, consumers lose options and leverage. Big companies secure their place as virtual monopolies, then hike up prices to make up for money lost in the battle for market control.
For customers, the hidden costs of reduced competition are steeper prices, less choice in products and services, and diminished incentives for innovation. Companies have little motivation to improve quality or lower costs when they have a captive market. Overall, widespread acquisition may be good for big business in the short term but bad for consumer welfare and India’s economy in the long run.
The Competition Commission of India has raised concerns about over-consolidation and its impact on fair market practices. However, more needs to be done to curb harmful concentration of power in major sectors and protect the interests of customers and citizens. Promoting healthy competition is key to keeping prices affordable, encouraging innovation, and safeguarding consumer choice.
In summary, reduced competition through frequent mergers and takeovers may lead to higher costs, less choice, and market inefficiencies that hurt India’s economy and quality of life for citizens in the long run. Competition is essential for keeping big business in check and ensuring a fair, balanced market that benefits both companies and consumers. Overall, the acquisition wave sweeping India has many hidden costs that policymakers and regulators must address to support a sustainable future of shared prosperity.
Emergence of Corporate Monopolies
With the recent wave of acquisitions in India, corporate monopolies are on the rise. As large companies gobble up smaller competitors, consumers are left with fewer choices and higher prices.
Less Competition
When companies merge or one buys out another, there are fewer independent players left in the market. With less competition, companies can raise prices without worrying as much about customers defecting to rivals. Recent examples in India include the consolidation of airlines like Jet Airways and Kingfisher Airlines, as well as bank mergers like HDFC and Satyam Computers.
Higher Prices
Without competitors nipping at their heels, large companies have more power to raise prices. Studies show that following mergers and acquisitions, the remaining firms often increase prices by significant amounts. For example, after the merger of HDFC and Satyam Computers, banking fees rose by over 20% the next year. Similarly, after several airlines merged in the early 2000s, domestic airfares climbed nearly 50% within 12 months.
Less Innovation
When a few big companies control an industry, they have little incentive to improve services or introduce new products. Why invest in innovation when customers have few other options? This can stifle progress that would benefit both companies and consumers in the long run.
Of course, some consolidation can achieve efficiencies and savings that are passed onto customers. However, the emergence of corporate monopolies often does more harm than good. The Competition Commission of India has raised concerns about reduced competition and is working to limit anti-competitive practices. More consumer choice and fair prices are better for economy and your wallet inn the long run. Overall, moderation and balance are key; too much of any one thing rarely ends well.
Time for More Robust Antitrust Regulations
As companies in India continue to acquire smaller rivals at a rapid pace, it may be time for more stringent antitrust regulations to prevent potential downsides for consumers.
Lack of Choice
When large companies buy out or merge with competitors, it often leads to less choice in the market. Fewer options mean less incentive for companies to keep prices low or innovate. Some acquisitions have even resulted in virtual monopolies where one company controls an entire sector.
For customers, less choice translates into higher prices and lower quality. The Competition Commission of India has raised concerns about how some acquisitions may reduce competitive pressure in the Indian economy. More active enforcement of antitrust laws could help curb anti-competitive mergers and protect consumer interests.
Move Towards Capitalism
Some analysts argue that India’s acquisition wave is pushing the economy closer to a capitalist model dominated by large corporations. As smaller companies are bought out, power is concentrated into fewer hands. Strict antitrust policies may be necessary to ensure healthy competition and protect small businesses.
Risk Aversion
Rather than taking risks to develop new products or expand into new markets, some companies opt to acquire already successful competitors. While acquisitions do present opportunities for growth, they can also reflect an aversion to risk that stifles innovation. Stronger antitrust enforcement may encourage more companies to take chances on developing competitive advantages through R&D and organic expansion.
Overall, India would benefit from more watchful regulators scrutinizing the competitive effects of mergers and acquisitions. Antitrust laws exist to promote fair competition and protect consumer welfare and should be actively enforced to prevent potential downsides like lack of choice, higher prices, and dampened innovation. What’s needed is a balanced, nuanced approach that still allows efficient deals to move forward. With the fast pace of acquisition in India, the time for more robust antitrust regulations may be now.
Conclusion
So what does all this mean for you as an Indian consumer? In short, less choice and higher prices. As companies gobble each other up, your options for goods and services decrease. And with less competition, companies can raise prices without worrying about losing your business.
AUTHOR-
Prof. Raman TIrpude
Assistant Professor of Management
Maharahstra National Law University Nagpur,
EX-ITCian, Ex-Marico…
raman's blog 