Acquisitions and mergers between companies are at the heart of the dynamic of late-20th-century capitalism. Within and between the nation-states (which still provide the main focus of the trading and regulatory environment) it is a continuous process, resulting in ever-larger companies aiming to service ever-bigger markets. News that British Petroleum and Amoco are to join together in what is billed as the world's largest ever industrial merger, making it the third biggest global oil company, provides a sharp reminder of these realities and prompts the question; does this best serve the interests of consumers as well as of the companies involved?
The merged company will have a workforce of nearly 100,000 and an annual turnover of some 110 billion dollars. It will have oil exploration facilities in some 36 countries and will become the largest oil and natural gas producer in the United States and the UK North Sea sector. It will control nearly 30,000 service stations around the world. The range of its chemical manufacturing strengths is indicated by BP's involvement with acetic acid production, with polybutene used in cable insulation, fuel additives, adhesives and polyethylene, used in food packaging and gas pipes.
It is not surprising, therefore, given the complex operations and scale of such activities, to hear the merger justified as offering the best investment opportunities for companies that have "the size and financial strengths to take on those large-scale projects that offer a truly distinctive return". News of the merger drove up share prices and seems set to increase combined corporate profits. The merger is further justified in terms of synergy between its geographical and functional strengths, rationalisation of staffing levels, more focused exploration and improved procurement.
It is bound to stimulate similar such processes throughout the international oil business, characterised recently by historically low oil prices. Fierce competition makes the new company a highly resourced but far from preponderant player in the international market place, where it will occupy third place behind Royal Dutch/Shell and Exxon Corporation.
Significantly, too, this alliance between a British and a US company is a reminder that transatlantic links remain crucial even in an era of closer European integration, where the single market is soon to be copperfastened by a single currency. Regional integration is precisely intended as a means of regulating such globalising trends, both to ensure fair competition and to protect the consumer interest. The new co-chairman of the merged company, Mr Peter Sutherland, has been a vocal defender of the European Commission's regulatory role in competition policy.
It is a reminder that transnational and multinational companies control substantial sections of the international economy. Their corporate governance styles and structures therefore concern many people beyond the range of interests represented by their managements, employees, shareholders and consumers. They operate in the public domain and must be subject to its increasingly international legal and political systems of accountability.