There are concerns in the United States that a wave of corporate consolidation among some of the world’s biggest firms is giving rise to a new breed of “megacompanies” but so far there are no signs of such a trend taking hold in Ireland, according to business experts.
Former president Barack Obama's administration has reportedly been clamping down on mergers that create such huge entities amid concerns that less competition may be weighing on economic growth, allowing these companies to keep wages down and reduce investment in innovation, according to the New York Times.
Over the last few years, the White House has been actively overseeing a number of major takeover deals and, in some cases, actively trying to prevent some of them going ahead, such as the AT&T merger with Time Warner.
Although the new President, Donald Trump, railed against media company mergers on the campaign trail, including AT&T and Time Warner, experts and observers say they see no evidence Mr Trump will be worried about the continuing rise of megacompanies in other parts of the economy.
Relocation to Ireland
Simon MacAllister, a partner in transaction advisory services at EY Ireland, says that if US companies try to push through large deals, it is unlikely to be through inversions, which could affect firms in Ireland. Last year Mr Obama’s anti-inversion laws scuppered Pfizer’s $160 million (€150 million) takeover of Dublin-Allergan that would have lead to the drug giant’s on-paper relocation to Ireland.
“They would likely focus carefully on the impact on US jobs and trade,” he said. “The optics of any such deals will become as important as the substance. It is possible for instance, that a deal which could have faced competition issues in the US previously could now face a more favourable outlook if they can demonstrate more tax being paid in the US, or more jobs being on-shored or created in the US.”
He doesn’t foresee any immediate challenges for the Competition and Consumer Protection Commission (CPCC), but “it’s not impossible to imagine a scenario where the CPCC has a role in a large deal involving US companies by virtue of their European HQ being in Ireland, and political pressure from the US being ramped up to ensure the deal is approved without restrictions”.
Regardless of Mr Trump’s influence on policy, for Ireland, “ultimately any deals will continue to be driven by the attractiveness of an Irish business to a US buyer”.