10 Companies You Didn’t Know Had Near-Monopolies
The Sherman Anti-Trust Act goes back to 1890, but that doesn’t mean there aren’t still companies out there with way too much power and market share. The law was intended to prohibit anti-competitive business practices and protect the public from the failure of the market, and it required the Federal Government to step in when necessary. The term monopoly suggests complete control of an entire supply of goods or services in a certain area or market. Ultimately, what constitutes a true monopoly is determined by the FCC and other regulatory bodies, but there are plenty of companies that most would agree have way too much power.
The monopolies or near-monopolies we usually think of tend to be technology giants like Microsoft, Facebook, and Google, which holds more than 60% of the search engine market. Netflix has been accused of coming close to monopolizing the online video market. Other more commonly hated companies like Monsanto, Coca-Cola, Verizon, and Comcast are also frequent targets, although consumers can give the FCC some props for its role in blocking Comcast’s proposed acquisition of Time Warner.
Aside from businesses like these that consumers typically call out for dominating their markets, there are a lot of other companies with enough power to arbitrarily raise prices and prevent other companies from entering their territory. Of the most profitable industries, both globally and in the U.S., it’s hard to think of one that isn’t somehow lacking meaningful competition. In this article, we list the monopolies that don’t typically come to mind or could even be somewhat hidden from the public eye. Here are 10 companies you might not know have huge market share and toe the line of having monopolies.
1. Anheuser-Busch InBev
AB inBev is the world’s largest brewing company, distributing beer brands such as Budweiser, Corona, Stella Artois, and many more. Despite a DOJ antitrust lawsuit, AB inBev acquired GrupoModelo in 2013. It has also attempted to buy SABMiller, the second largest beer producer, and now it’s even acquiring craft breweries. The company’s market share is 46.4% in the U.S. and much higher in other countries like Brazil where market share is 68.2%.
2. YKK Group
The world’s leading manufacturer of zippers is YKK, a Japanese company that goes back to 1934. YKK makes more than 7 billion zippers every year, or about 50% of all the zippers on the planet, so there’s a good chance you’re wearing a YKK product right now.
More than 80% of eyewear brands are designed and retailed by Luxottica. What’s more, the company controls both high-end brands, like Ray Ban, and the discount sunglasses you pick up at Target. A 2012 60 Minutes special suggested Luxottica uses its dominant position to artificially jack up prices on designer sunglasses that are made in the same facility as cheaper pairs.
4. De Beers
Founded in 1888, De Beers has a long history of monopolistic practices, essentially owning the global diamond trade for many years. De Beers has been called the biggest monopoly in the world, but it doesn’t have the market share it once held since the company pleaded guilty for price-fixing in 2004. While its global market share was more than 80% in 1989, in 2014 it hovered around 35%.
5. Tyson Foods
With 25% market share in the U.S., Tyson is the leader of the “big four” meatpackers, and one of many companies accused of running destructive food monopolies. After a damning expose by Christopher Leonard, Tyson made a transparent attempt to repair its reputation by promising to stop using antibiotics in its chicken production by 2017, but this is a drop in the bucket compared to the many questionable practices raised by Leonard.
Although its national market share is relatively low, like other big insurers, Anthem has cornered the market in several U.S. regions. A 2014 study by the American Medical Association found Anthem was the largest health insurer by market share in 82 of 388 metropolitan areas examined by the AMA. That’s more than double the number of areas controlled by the next two most dominant insurers. AMA President Robert M. Wah remarked, “The AMA is greatly concerned that in 41% of metropolitan areas, a single health insurer had at least a 50% share of the commercial health insurance market.”
Intel is known for its microprocessors, but it has a long history of dominating numerous markets in the computer industry. The story goes that for years Intel allowed its smaller competitor, AMD, to just barely stay in business so Intel could avoid scrutiny. Forbes reported that whenever AMD’s market share neared 20% or so, Intel would turn up the heat with strategic pricing changes to drive down AMD’s share. Intel appears to have given up the ruse entirely in 2014, as its market share for servers was roughly 98% in Q3. Intel is in talks to buy Altera Corporation, which if successful, will be Intel’s biggest-ever acquisition.
Pearson controls roughly 60% of the North American standardized testing market, according to Fortune. On Last Week Tonight, John Oliver explained that American students could conceivably take Pearson-designed tests from kindergarten through at least eighth grade, use Pearson-designed curriculum and textbooks, and have teachers certified by a Pearson test. The company has also come under fire for the poor quality of its educational products, suggesting some healthy competition is long overdue in this area.
Peter Thiel, entrepreneur and co-founder of PayPal, told The WorldPost, “Monopolies are great companies. Super competitive ones are not.” According to Datanyze, PayPal has nearly 91% U.S. market share. In 2014, eBay announced it would spin off PayPal into its own publicly traded company, and the online payments giant is also looking to acquire Paydiant in order to compete with Apple Pay in the mobile payments space.
10. Sirius XM Holdings
Despite opposition from National Association of Broadcasters and the attorneys general from several states, Sirius and XM merged in 2007. The company came close to filing for bankruptcy shortly after the merger, but has since rallied. Critics call it a classic monopoly, as Sirius XM Holdings owns the country’s entire satellite radio market. The company’s only competitors are internet radio providers and terrestrial radio. Today, satellite radio comes pre-installed in 70% of new cars sold in the U.S.