A Game of Bocce Ball

Mergers, Acquisitions, and Political Plays

Today’s business landscape seems to be full of moving targets, like a bocce ball tournament. Political pressures, rather than consumer demands, make it hard to determine who is calling the shots and how best to advance one’s position. Indeed, one of the world’s most popular ball games seems akin to America’s business landscape as government interference has drawn business owners away from the boardroom and into the courtroom to justify the strategic moves they are making.

In bocce, smart teams win by placing the pallino where it suits their strengths—setting the terms of play before the round even begins. Business strategy works the same way: companies invest, innovate, and position themselves to shape a competitive landscape favorable to their abilities. This is why Meta sought to acquire Instagram and WhatsApp; and last month it was finally vindicated, winning an antitrust battle brought forth by the Federal Trade Commission (FTC). Now making headlines is Netflix’s bid to buy Warner Bros., and this acquisition has drawn the attention of President Trump who has openly conveyed that he plans to “be involved.”

Shifting the Court: Antitrust Enforcement in Motion

Political posturing can dismantle even the best-laid strategies, and businesses must understand the boundaries and layout of the game rather than focus solely on the target at hand. What makes matters worse, though, is that each election cycle, the rules can change. So, while the FTC’s case against Meta is over, it is hard to say that the company truly “won,” given the time, resources, and uncertainty involved. And, as for Netflix, antitrust concerns are top of mind.

The government has shown an increasing interest in scrutinizing and stopping mergers which occur between firms within the same industry—which extends beyond the tech sector. In fact, it was around this time last year that the Kroger–Albertsons merger was called off after being blocked by the FTC.

The consolidation of these grocery retailers was claimed to be bad for employees and customers since it would reduce head-to-head competition. And while this would be true regarding the rivalry between Kroger and Albertsons, it would not be the case for the grocery sector overall—actually, competition could have increased. Kroger’s CEO Rodney McMullen conveyed at the National Retail Federation (NRF) 2023: Retail’s Big Show aspirations for building up capacity to compete with the likes of Walmart, Costco, and Target. It is worth noting, though, that while the proposed merger would have combined roughly 5,000 supermarkets into one, this still pales in comparison to the size and amount of Walmart’s retail units.

Kroger’s plans were to scale up and become a “premier omnichannel food retailer, delivering quality, value, convenience and choice for customers.” The plan was to enhance customer-centric strategies and even to increase options for healthcare and pharmaceutical services, which would have been a good thing, given rising concerns over pharmacy deserts and food insecurity. Nevertheless, the proposed merger attracted a variety of critics, with Robert Reich, unsurprisingly, being one of them. And after a costly antitrust battle with the FTC—to the tune of $1 billion—the deal reached a dead end.

Any potential benefits that could have resulted from the merger will now never be realized. Consumers will never know what they could have gained due to the unforeseen effects of the FTC’s infringements on private matters. And some employees are now worse off, given that Kroger has released plans to close about 60 stores over the next 18 months. Underperforming stores that were being kept on a lifeline in hopes of the merger passing are now being shut down, and job cuts are in the works.

Thanks to the FTC’s blockade, Kroger and Albertsons are engaging in cost-saving strategies and are focused on securing general store sales instead of diversifying and expanding product and service offerings. Overall, efforts for both Kroger and Albertsons have reverted back to streamlining operations and ensuring a return on capital for investors.

The Ricochet Effect: Mergers Don’t Always Roll Straight

A recent article in the Wall Street Journal highlights the disheartening effects of antitrust scrutiny for both the market and the American businesses involved. The article refers to a proposed deal between iRobot and Amazon that originated in 2022. Amazon sought to acquire iRobot, maker of Roomba, but due to regulatory pressure spurred on by Sen. Elizabeth Warren and Rep. Ocasio-Cortez, the deal was called off in 2024. Now, fast-forward to the present day, and iRobot is bankrupt and has been taken over by Shenzhen Picea Robotics, a Chinese manufacturer.

It is silly to think that bureaucrats can predict the future or know what the results of an M&A deal will be. Even those pursuing and partaking in the transaction are reeling with the risks up until (and sometimes after) the transaction transpires. Take the horizontal mega-mergers between Kmart and Sears or AOL and Time Warner. These deals now serve as classic case studies of mergers gone wrong, and the concerns that were raised over corporate consolidation and market domination seem ridiculous now in retrospect. In fact, failure rates for M&A deals hover between 70 and 90 percent. At those odds, the FTC’s intensive scrutiny—and taxpayers’ money—would be better spent elsewhere.

The M&A process is far from easy, nor is it ever guaranteed, but, despite the high risk, some deals do deliver big rewards. Well-known horizontal mergers that improved industry standards, expanded the scope and reach of the firms involved, and elevated the consumer experience include Sirius and XM Radio as well as Disney and Pixar. For Sirius–XM, the merger stabilized the status of two struggling firms; for Disney–Pixar, combining animation teams spurred innovation and generated an impressive list of fan favorite flicks.

Just as in bocce, M&A success depends on careful planning, strategic execution, and the ability to adapt to the natural bumps and slopes of the playing field. Market risks—like imperfections on a court—are part of the game and can sometimes be anticipated or mitigated. Political risk, however, is different. It is volatile, external, and often unrelated to a firm’s performance. Election cycles, shifting enforcement priorities, and political signaling create an atmosphere of uncertainty that no amount of preparation can offset—even the most skilled players will struggle when a referee keeps redrawing the lines.

Who Controls the Game: Market Discipline or Regulatory Referees?

In bocce, the goal is to land a ball so precisely that it “kisses” the pallino, gently touching the target and earning an unbeatable position. But even a perfectly laid shot can be knocked away before the game ends. The question is whether the blows come from the natural course of play from opponents—or from those who would rather change the rules of the game.

Each antitrust case tightens the public sector’s grip on how firms may grow, compete, and operate, shifting authority away from the marketplace and into the hands of government agencies. Companies that become too big, too efficient, too profitable, or simply too independent increasingly draw scrutiny, as politicians lean on media narratives to portray big businesses as being inherently suspect. Yet this fixation on supposed monopolies obscures a more troubling development: the steady expansion of bureaucratic power over private enterprise. In truth, big government poses a far greater threat to innovation and competition—and, as history shows, government control has also been problematic for even bocce devotees. For instance, the Republic of Venice publicly condemned the sport in 1576, claiming that it distracted from “the security of the state,” and those caught playing faced fines or imprisonment. Across Europe, members of the ruling class repeatedly tried to regulate or even ban the sport. Even the Catholic Church prohibited clergy from participating, declaring the game a form of gambling.

None of these efforts, though, could suppress bocce’s enduring popularity—and the game has quite an impressive list of admirers: Emperor Augustus, Leonardo da Vinci, Galileo, Queen Elizabeth I, Sir Francis Drake, and George Washington were all passionate players. Washington enjoyed the game so much that he reportedly built a bocce court at Mount Vernon.

As the new year brings on a new start for some M&A deals, let’s hope the game will be decided by competitors’ skill rather than the political pursuit for greater regulatory power. If a merger turns out to be bad for employees and bad for consumers, it will also be bad for the business in the end and those involved in the transaction should bear the costs. No need for referees—especially when the referees have limited experience or understanding in how the game is played.

Dr. Kimberlee Josephson is an Associate Professor of Business at Lebanon Valley College in Annville, Pennsylvania, and a Research Fellow for the Consumer Choice Center.