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Why the FTC should consider degradation of service

Why I Left United Airlines The New Yorker


The United merger is a grand example of a consumer sinkhole—a merger that proves to be not just a onetime event but an ongoing disaster for consumers (and shareholders) who suffer for years after. I wasn’t the only one who noticed the airline’s descent. Since 2011, United has piled up a mountain of consumer complaints (according to one report, only Spirit has more per passenger) and has repeatedly tallied some of the worst quality rankings in the nation, trailing even discount airlines like Frontier and AirTran. A Web site named collected these complaints; United tried to sue it out of existence.

The sinkhole effect—which is not confined to airlines—means that we need to take a much closer look at mega-mergers in the essential industries whose services are hard to avoid and which have a disproportionate effect on quality of life. Looking at examples from other industries, like hospitals, can be even more alarming. During the early aughts, the Federal Trade Commission analyzed several completed hospital mergers. Those studies revealed two unmistakable results: 1) an increase in prices explainable only by a reduction in competition, and 2) the same or worse outcomes, as measured by indicators that included patient mortality. Other studies have largely confirmed the results. Higher prices and more dead patients; it doesn’t really get worse than that.

The Justice Department and the Federal Trade Commission are supposed to stop mergers that are bad for consumers, but degradation of service, with its direct effects on consumer welfare, does not get enough attention. 

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"Degradation of service" = "Bad for consumers" to me.

So yeah, it's surprising the FTC does not give that more weight.

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