1960s >> 1962 >> no-690-february-1962

Editorial: Mergers and Take-overs

The air is thick with rumours of mergers and tales of take-over bids. The past year has seen more company amalgamations than ever before and the pace has become even hotter during recent months.

Within the space of a few weeks ICI has made overtures to Courtaulds. Mr. Gore has tried hard to take Saxone into his shoe empire, Mullard and GEC have joined up to make transistors, and there may be a technical link-up in the car industry between BMC and Rolls Royce. There have been almost daily reports of other such link-ups among firms not so well known.

The same development is going on abroad. The proposed ICI-Courtaulds link-up was a direct reaction to the recent merger of the French giant Rhone-Poulenc with another big firm Celtex which made it into one of the most powerful firms in Europe in man-made fibres. The Mullard-GEC tie-up scotched rumours that Phillips of Holland were out to take over GEC (Mullard is the British subsidiary of Phillips and presumably the new arrangement will satisfy its appetite for the time being). All over the Common Market there are amalgamations, subsidiaries being formed, pooling arrangements being made to exchange technical know-how.

It is the Common Market that has had a lot to do with quickening up this process, of course. With Britain’s application to join the Six the pressure is now hard on British industry to adapt itself more effectively to meet the challenge of European competition. British firms have been actively engaged for many months in getting footholds in Europe, setting up subsidiaries, and forming link-ups as hard as they can. Even the United States, which has been pouring money into Europe since the end of the war, has increased its activities during the past twelve months under the stimulus and threat of the Common Market.

In agriculture also the trend is towards bigger and bigger units. The day of the peasant proprietor is fast coming to an end. In Germany, France and Italy he is being deliberately eliminated. Farm holdings are being joined up into larger units, and the surplus farmers forced into the towns and industry. Even in Britain and America, where the farm population is only a fraction of the whole, the process still goes inexorably on,

The same thing is happening in the sphere of distribution. Supermarkets spread everywhere, with the bigger ones even at this early stage already beginning to swallow up their smaller brethren. We now have super supermarkets. A further recent appearance in this country has been the discount store, narrowing margins still further and squeezing the small man even harder. There may be half a dozen different names over the shoe shops in the local High Street, but if Mr. Clore’s attempted deal goes through they will all probably belong to the same firm.

Even among nations the same forces are at work The Common Market is itself the reflection in some degree of the pressures towards bigger and bigger units, the size of the new giants on the world scene—Russia, the U.S. and China.

This process of concentration is part and parcel of capitalism. Behind it lies the relentless drive for greater and still greater efficiency, and before it the all-important quest for profit. Marx saw it operating in its very earliest stages over a hundred years ago and foresaw that its effects would become more and more profound.

From the hectic pace of events today we know how right he was.