The largest corporations are using their market power to impose high prices. According to a new study, the 20 largest corporations worldwide have significantly increased their markups in recent years. They have risen to 50 percent by 2022.
The largest companies can therefore achieve significantly higher margins and profits than other companies. Even other listed companies are significantly lower. In a database of around 34,000 listed companies, the price premiums for the bottom half of these companies averaged 25%. Many smaller companies are likely to make even lower profits. In effect, we are all paying a form of private tax to large corporations and the super-rich – at a time when the rising cost of living is a major burden for many people. The study “Taken, not Earned” (pdf) was jointly published by the Balanced Economy Project, SOMO, Global Justice Now and LobbyControl.
Increasing concentration
Rising markups for the largest companies. Source: Taken, not earned, p. 14
The background to the high price premiums is the increasing concentration of the economy. More and more sectors are being dominated by a small number of companies. Some examples from the study:
Four companies control half of the global seed market. Four companies control over 60 percent of agrochemicals and 62 percent of veterinary pharmaceuticals. Three companies control almost 100 percent of commercial poultry breeds. Half of the global market for agricultural machinery is controlled by six companies.
So when tractors of protesting farmers roll through Germany, one could also read the concentration in the industry from the brands. Farmers are also exposed to massive market concentration on the consumer side: the four largest food retailers have a market share of over 80%.
But it is not only in agriculture that concentration is huge: the epitome of dominant corporations today are the big tech companies such as Google, Amazon and Microsoft. Then there are sectors such as pharmaceuticals, accountants, music labels, hotel platforms, drinks and beer companies and so on. The study also shows that the 20 largest companies have a large overlap with the 20 richest people in the world. 14 of the top 20 companies are sponsors of the World Economic Forum. They spend over 155 million euros annually on lobbying in the EU and the USA. Their influence is also strengthened by their structural economic power.
Growing imbalances
This year, Oxfam’s annual report on the World Economic Forum also focuses on monopoly power and the connection between growing monopolization and inequality. A clear picture emerges from both reports together:
- More and more sectors are being dominated by a few large companies.
- Corporate profits are rising, although a large proportion is attributable to a small number of companies.
- Most of the profits go to investors and management at the expense of employees and (future-oriented) investments.
These imbalances not only exacerbate social inequality. They weaken democracy because political decisions are influenced by these power imbalances. They also harm small and medium-sized enterprises and make the necessary economic transformation more difficult.
Pushing back monopoly power
We must make these imbalances and the concentration of economic power a central issue of economic policy. A key element of this is a stricter anti-trust policy. It has been too company-friendly in recent decades, has waved through many mergers and has not effectively curbed monopolization. Fortunately, there are signs of a turnaround – but the resistance is enormous. This is why a stronger social movement against monopolization is important.
According to the studies, we also need changes in other policy areas. Taxation of excess profits and wealth, public investment and infrastructure, other trade and investment agreements and the promotion of co-determination and alternative company models are needed. The economic policy of the last decade has been too monopoly-friendly overall.
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