Steven Pearlstein, writing for the Washington Post’s Wonkblog in an article entitled “Don Draper, your antitrust attorney is on line 2,” argues that the proposed merger of advertising / p.r. firms Omnicom and Publicis is not a good idea, and further argues that the “failing business model” defense makes little sense:
antitrust law, at least in the United States, is meant to protect consumers, not companies. There is nothing in the antitrust law that says companies, or industries, that are threatened by disruptive innovation should be protected from extinction. The process of creative destruction, which the antitrust laws are meant to encourage, entails a fair amount of, well, destruction — of jobs, of companies, of shareholder value. It’s painful for some people, but, as we used to say at summer camp, “tough noogies.”
There’s nothing to prevent either Omnicom or Publicis from independently responding to these market changes by building up its already considerable digital marketing capabilities, or partnering or contracting with Google and Facebook if those repositories of consumer data are willing, or launching some sort of rival service if they are not.
I’m not familiar with the Omnicom / Publicis facts, and so express no opinion about them. But the above argument I think misses the point. If disruptive technologies (a.k.a. Google and Facebook) are both expanding the relevant market definition and making it difficult or impossible for two or more legacy firms to compete (a factual question), then antitrust law should in theory allow legacy firm mergers to maintain competition. The alternative — and again, everything depends on the facts — is the possible loss of firms and increasing market concentration and market power. The received wisdom is that result is not good for consumers.
In any event, it’s nice to see the issue debated in the Post.