Business groups & their market power

Breaking up large business groups would create more problems than it solves. Rather, policies to break down the business group format are far more likely to be effective

The turmoil around Adani Group has opened up discussion about the role of connections between businesses and politicians and the consequences, notably the accumulation of market power by preferred businesses. One striking indicator has been the extent of concentration. In India, the top 10 companies’ revenues account for over 15 per cent of GDP and the percentage appears to be higher in terms of assets. These concentration ratios have also been rising sharply in recent decades. And it is not just in India. Throughout Asia, big, highly diversified business groups — mostly family-owned — occupy substantial bits of economic territory.