Texas Tech University

When companies say a merger will result in lower prices, try laughing in their face

David Lazarus

July 10, 2018

Chicago Tribune - The next time a big company, and especially a telecom company, tells lawmakers and regulators that a multibillion-dollar merger will result in lower prices for consumers, I hope everyone in the room breaks out in laughter.

It seems fair to wonder how long it will take before AT&T jacks up the price of broadband Internet access, U-verse pay-TV programming and other services.

Ominously, the New York Times reported Monday that AT&T already has told Time Warner's HBO premium channel that it's making "not enough" money, despite being profitable.

"You can see why they do it," Michael Noel, an economist at Texas Tech University, said of companies' pre-merger promises of post-merger price cuts. "They can't just come out and say their merger will result in bad things for consumers."

So companies paint the rosiest picture possible, he said, with impressive gains for consumers, workers, shareholders — basically everyone.

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