The thing that everyone on Shark Tank

thinks they have a great idea for,

even this guy.

Our cakes... are made of foam,

and they're rentals.

-Wait! -(AUDIENCE LAUGHING)

So, I can neither have my cake, nor eat it too?

I am in, here is a million dollars.

(AUDIENCE LAUGHING)

Small start-up businesses like that

hold a special place in America's heart

and politicians from across the political spectrum

love to talk about how important they are.

Small business is the backbone of the American economy.

Small businesses are the backbone

of this nation's economy.

BOTH: Small businesses are the backbone of our economy.

BOTH: Small businesses are the backbone--

ALL: Small businesses are the backbone of our economy.

ALL: Small businesses are the backbone of our economy.

ALL: Small businesses are the backbone of our economy.

-(AUDIENCE APPLAUDING) -It's true.

"Small businesses are the backbone of our economy"

is that rare thing that every politician agrees on.

It's that, support the troops,

-Ted Cruz can go fuck himself... -(AUDIENCE LAUGHING)

...and South Dakota senator John Thune can get it,

-he can get it! -(AUDIENCE LAUGHING)

Now, look, it can feel like we're in a golden age

of small business start-ups, but that isn't actually the case.

The rate at which new businesses are been created

has actually being steadily falling

since the 1970s. And I would argue that

one of the reasons for that, is that big businesses,

have been getting even bigger,

which brings us to our main topic tonight,

"Corporate Consolidation."

Recent years, have seen

record highs for mergers and acquisitions.

As you would know, if you've ever watched

the thrilled reactions they get on business news.

M&A has been hot, continues to be hot.

An exciting year for M&A.

A few blockbuster deals being announced.

They call it "Merger Monday," on Wall Street.

It is shaping up to be another "Merger Monday."

They don't call it "Merger Monday" for nothing.

-Media mega "Merger Monday." -"Merger Monday."

M-- M-- M...

"Merger Monday"?

-At last we have one, I say... -♪ Hallelujah ♪

Okay, that was obviously a little nauseating, but also,

pressing a button on TV is a little bit dangerous

because someone could take that footage

and then loop any sound that they want under there.

Now, obviously I'm not immature enough to do that

but if I were it would look like this.

"Merger Monday"?

At last we have one, and I say...

(FART NOISE)

-(AUDIENCE APPLAUDING, CHEERING) -(BLOWS)

The point is--

This point is, all this merger activity

has all made some sectors of our economy

ridiculously consolidated.

NEWSCASTER: The United States has gone from having

ten large airlines back in 2000 to just four today.

And those four mega airlines now dominate

more than 80 percent of the U.S. market.

Yeah, we down to just four major airline choices,

and no that does not include jetBlue because that

is not actually an airline.

It's just a very expensive way to eat those weird blue chips...

-(AUDIENCE LAUGHING) -...which are, and this is true

-just sliced Grover arms. -(AUDIENCE LAUGHING)

Look, and airlines here are just the beginning.

The rental car business

is now 90 percent dominated by just three companies.

The U.S. beer industry is 70 percent controlled by just two companies,

and online search engines are of course as we all know

dominated by one major player. That's right say it with me,

-Bing. -(AUDIENCE LAUGHING)

That's right. Bing, the best way to Google something.

In fact, look, full disclosure here.

Even our own parent company, Time Warner

is currently trying to merge with AT&T,

which makes this story a little dangerous for us to do.

Although you know, that is presuming

that AT&T executives manage to get there shitty service

working long enough to see it.

-(AUDIENCE CHEERING) -AT&T,

it's the top telecom company around

alphabetically and nothing else.

-(AUDIENCE APPLAUDING) -Look, even some brands,

that you might think of as indie

now have multinational owners. Burt's Bees?

It's-- it's not run by a backward bee fucker

-called Burt. -(AUDIENCE LAUGHING)

It's run by Clorox.

Tom's of Maine, the deodorant

which did so little to deodorize your freshmen year roommate.

(AUDIENCE LAUGHING)

That's not owned by Colgate-Palmolive.

And then there was Goose Island.

Now, their ads feature beardy brewers rubbing

-hops on their faces. -(AUDIENCE LAUGHING)

But what they don't mention

is that Goose Island is owned by Anheuser-Busch,

and that farm that you just saw

is located at 822 Budweiser Loop.

It's presumably just passed Bud Light lime-a-rita boulevard.

Basically, if you see the mass grave of Clydesdale horses,

turn left and you're there.

-(AUDIENCE LAUGHING) -And it says something

about the rapid rate of mergers that even Jim Cramer,

occasionally finds himself in disbelief

at one happening.

Watch him react to a mega merger in the aluminum can industry.

Ball Corp's acquisition of Rexam

is taking the number of competitors

in this space down to, get this,

-from three to two. -(AUDIENCE LAUGHING)

How did they let that happen?

-(AUDIENCE LAUGHING) -Yeah.

It's not great when a business casual Louis C.K.

with a sound effects board

is saying, "Holy shit this was a really bad idea."

-(AUDIENCE LAUGHING) -But,

but "how did they let that happen?"

Is actually a really good question.

And the answer is interesting, because we've had

anti-trust laws on the books for more than a century.

And I'm not saying that every single merger is bad.

Sometimes businesses getting bigger can lead

to greater efficiencies and improvements.

The tension is between allowing that

and preventing them from doing real harm.

So it's a-- it's a balance.

But since the late 1970s, that balance

has tipped decidedly in favor of being merger friendly,

which has led to real problems.

And let's start with the obvious,

for workers, mergers can often mean big layoffs,

but it's not just employees that can suffer,

consumers can too, as Jim Cramer explained,

in that aluminum can segment

in an inexplicably sarcastic tone of voice.

I always say competition, while great for you, a consumer,

is it enough amount of profits.

Sometimes a business would be a total monopoly

with no competition whatsoever, and while that's the ideal,

it's very rare to see a genuine monopoly,

-because of course, it's against the law. -(AUDIENCE LAUGHING)

Which brings us to the next best thing, an oligopoly,

where a handful of companies control an entire industry,

co-existing peacefully

without much in the way of price competition.

-That's a weird tone to use... -(AUDIENCE LAUGHING)

...to describe something that's clearly awful.

It's rare to see genuine bestiality because of course it's against the law.

Which brings us to the next best thing,

having sex with the stuffed animal

while looking at pictures of a real horse.

(AUDIENCE LAUGHING)

And-- And for sense of what it can look like

when a handful of companies co-exist peacefully

without much in the way of price competition,

just look at airlines.

In 2012, one airline executive told an industry conference,

Consolidation has allowed us to do things like

ancillary revenues, which is jargon

for all those fees that drive you fucking crazy!

Now, American was the first major airline

to charge you for your first checked bag back in 2008,

and back then people could not believe it.

NEWSCASTER: American Airlines will soon charge $15

for the first checked bag.

That on top of a fee of $25

-for your second one. -Fifteen dollars? Holy cow.

I'll have to put my underwear in my pocket.

(AUDIENCE LAUGHING)

Yes!

First, that is clearly a delightful man.

Although, it does makes you wonder whether he

fills his bags full of underwear and nothing else.

-(AUDIENCE LAUGHING) -But-- But within months,

most major airlines had followed American's lead

and it was essentially industry standard.

And it is easy for that to happen

when there's only a handful of big players.

In fact since then they have added and increased bag fees

multiple times, often moving in tandem,

which is how those fees have gone generating around

540 million dollars a year a decade ago,

to 4.2 billion dollars now.

And that is infuriating. After all,

if I wanted exorbitant fees

that keep getting raised all the time despite shitty service,

I'd become a customer of AT&T.

-(AUDIENCE LAUGHING) -Yeah.

-Fuck you AT&T! -(AUDIENCE LAUGHING)

Even if you take over you'll never be my real dad!

(AUDIENCE LAUGHING)

And, look, you-- you may well be angry

with the service you get from airlines

but thanks to consolidation,

they don't really need to give a shit

about what you think.

And if you don't believe me?

Remember that awful video that went around earlier this year.

NEWSCASTER: The shocking images of a passenger

caught in a travel nightmare.

A man visibly shaken as he's yanked

and then dragged of a United jet by law enforcement.

All after refusing to give up his seat.

Yeah, that's the most horrifying thing

you can possibly see on an airplane,

unless your in-flight movie is The Boss Baby.

A movie that combines the unbearable smugness

of Alec Baldwin with an unbearable smugness

-of a baby. -(AUDIENCE LAUGHING)

Now, in the wake of that incident,

people said it was a PR nightmare

and there was talk on Twitter of boycotting United.

The problem is on certain routes they're the only option.

So, a boycott is gonna be pretty hard to pull-off,

and that is arguably why their CEO

was later able to open his earnings call for that quarter,

by describing a period in which, I will remind you,

a passenger had his teeth knocked out

on one of United's planes, like this.

OSCAR MUNOZ: Welcome to a terrific second quarter, strong financial

results and even uh, more incredible

operational results. And as you think of our customers,

I want to thanks them for their continued loyalty and support.

We continue to find new and better ways to service them

and make the more comfortable on our airline.

-(AUDIENCE LAUGHING) -And you know what?

Is it really any wonder that their earnings stayed solid.

United, is sometimes the only way to get

to where you are going.

Which actually explains their new slogan,

"You wanna fuckin' roller blade to Houston? Shut up and get in!"

(AUDIENCE LAUGHING)

And when and industry gets too consolidated,

any company trying to compete with them

or survive in their supply chain, can get crushed.

Now we all know about Amazon, Walmart or Google,

but there are less obvious examples of this too.

Take eye-wear. Now if you go into a Lens Crafters,

you'll see frames by brands like um,