MOSCOW (Pakistan Point News / Sputnik - 15th March, 2021) As the COVID-19 pandemic is driving small and medium-sized businesses into bankruptcy, their market share is likely to be entrenched by the large companies, increasing the corporate market power and narrowing competition, the International Monetary Fund (IMF) said on Monday.
"Firm-level analysis using Orbis data, which includes listed and private firms, suggests that the pandemic-driven wave of bankruptcies will lead to increases in industry concentration and market power," the IMF said in a report on corporate market power and related policy issues.
The share of the top four firms in the total sales of the top 20 companies within a narrowly defined sector may rise by 4 percent - to 60 percent - as a result of the pandemic "if the sales of bankrupt firms were to be reassigned to leading firms within their sector," the organization underlined.
"The pandemic-driven shift to online activities is also benefiting the large technology companies, which could further strengthen market concentration in their industries," the IMF noted.
In light of this, the regulatory authorities should be especially vigilant in merger control as such decisions might be harmful in the future, according to the organization.
The global economy has suffered from unprecedented pressure last year due to the outbreak of the COVID-19 and contracted by some 3.5 percent, the IMF said in January. Hospitality sector, the passenger airlines and the oil and gas sector were hit the most in light of the lockdown measures.
