I've been thinking about a new business concept designed to enhance competition and limit monopolistic practices. I'm sure it's not a new concept but I haven't read about anything like it. I've written about it several times before and recently discussed it at some length with one of my regular commentators on this article (comments evolved to this topic somewhat in the middle). Now I'd like to bring it to the front page again and give the concept a name.
The name I've chosen is BECi. It stands for Business Enhanced Competition initiative.
The strength of this concept lies in it's simplicity. It revolves around one simple rule - a business may not be allowed to purchase another business. BECi in no way limits a companies natural ability to grow within the marketplace by providing outstanding service, fair pricing and value to the consumer. What it does do is keep businesses from acquiring and eliminating their competition thereby allowing a more natural and controlled growth. Hostile takeovers followed by massive layoffs would be a thing of the past. It would also be much more difficult to control the market to the extent that you can fix higher prices while providing lower service levels.
BECi would still allow corporations to work together in synergistic relationships to provide enhanced capabilities. However, each company would exist as a separate entity with their own employees and accounting. This type of symbiotic relationship will provide more jobs and prevent companies from mass layoffs that typically happen when a business purchases another business. At the same time it will allow for an easy "divorce" if the relationship does not prove beneficial. We could use AOL/Time Warner as an example. BECi would not have prevented both AOL and Time Warner from working together to provide a larger business model. However, having discovered that such a business model was not effective, it would make it very easy for each company to venture off on their own again.
Under BECi, if a business fails for whatever reason, it would be dissolved and the employees and clients of that company would both be free to seek a new business to support. This allows for healthy competition among similar companies to offer those employees attractive employment benefits to acquire the best talent of the failed business. At the same time they would need to provide attractive prices and services to woo the customers of the failed business into being their new customers. This is how business is supposed to work in a free market system. BECi is a drastic yet simple change from the current practice of buying a failing business (hostile takeover), laying off employees at the stoke of a pen without consideration of the talent involved, forcing customers to do business with you even if they don't choose to, and eliminating the competition.
Franchise operations are a gray area for the BECi model but in most cases it would allow for such purchases - especially when the franchise is purchased by a person and not a business. But I think considerations could be made for a corporation who's business it is to operate a franchise. There will likely be a few other legal challenges to BECi, but in most cases the simplicity of the model makes for it's strength and provides few loopholes for abuse by mammoth corporations. If enacted, BECi would necessarily require that all existing businesses continue as normal but would stop any further business purchases. It would therefore take a while for the benefits to be felt through the economy but in some cases would provide enhanced competition almost immediately.
BECi is the simple solution to out of control mega business monopolistic practices. It forces business to act on better business principles of providing good competitive services and prices. The BECi business model makes even more sense when we consider the recent decisions that businesses be treated as individuals with all rights and responsibilities of individuals (except voting rights). It is illegal in this country to buy and sell individuals, so it follows that it should also be illegal to buy and sell a business. The concept is simple, effective and I think should be the law.
An article in USA Today showed how the current business model is poised to make monopolies the norm and not the exception:
I invite my reader(s) to discuss this concept pro and con. I would also be interested to hear about other articles on this topic so I can do further research.
UPDATE 1/19/11 The current deal between Comcast and NBC is a huge mistake that will not only limit competition and variety in programming, but it will also allow the a news organization to be controlled by a media company even more so than they currently are. The line between news and entertainment is further blurred. This is not healthy for our nation. We really do need a law like BECi that would stop this sort of Corporate controll.