Concentration begets concentration

The proposed Proctor & Gamble-Gillete merger illustrates the historical tendency of concentration in one line of business to foster defensive concentration as suppliers or customers try to restore a balance of power. As the New York Times' reporters put it this morning, "The friendly transaction reflects just how much the balance of power has shifted from consumer products makers to the giant discount retailers, mainly Wal-Mart, in recent years. The deal is a bid by two venerable consumer-products giants to strengthen their bargaining position with the likes of Wal-Mart, which can now squeeze even its largest suppliers."

Andrew Ross Sorkin and Steve Lohr, "Proctor Is Said to Reach a Deal to Buy Gillette," New York Times [natl. ed.], 1/28/05, A1, C14 (quotation from A1).