Monopsony in Labour Markets: The Corporate Law Contribution

Labour economists have attributed wage stagnation to employers' monopsony/oligopsony powers, which may be a consequence of corporate mergers. Traditional competition law cannot see the problem because it focuses on the effects of mergers on output markets (goods/services) and not input markets (labour). This article argues that company law (including takeover regulations) is oblivious to the adverse labour market effects of mergers because it narrowly focuses on capital (shareholders) and not labour (workers). These blind spots mean that mergers that lead only to concentrated labour markets remain unregulated, exacerbating wage stagnation. The article examines takeover law reforms that may address this problem, and concludes that the prevailing shareholder-centric DNA of company law is an obstacle to any measure that might favour employees. As long as company law remains fixated on one input (capital), the only viable line of assault on monopsonistic/oligopsonistic labour markets, it seems, is a reorientation of competition law.