The title of this article is wrong but after sifting through a couple of days of research on this subject I can’t bring myself to change it. I mean who knew that Univar, a trusted chemical distributor since 1924 was even for sale in the first place? On top of that, raise your hand if you knew Terminix, the worlds largest pest control company wasn’t even owned by- uh Terminix? CD&R an investment group bought the struggling giant (they had debts of $800 million- but who knew that either? sshhh, don’t say anything) out on March 19th, 2007 for $5.5 Billion dollars. Well, just as quietly it seems that this aggressive investment group has just bought out Univar who coincidentally is the worlds largest pest control product distributor. So if the title were to be corrected it might read something like;
Clayton, Dubilier & Rice, parent company of the worlds Largest Pest Control Company, (Terminix) Buys Out Univar, The Worlds Largest Pest Control Distributor Is This Good For The Industry?
Is It Just Me
Now normally I’m a free market guy and believe whole heartily in the “survival of the fittest,” but even so, it is assuming that everything is on a level playing field. So I certainly don’t begrudge the acquisition of Terminix who is the largest company in the world and needs pest control products to provide its service – Nor do I begrudge the acquisition of Univar who is the worlds largest seller of said pest control products but my eyebrows do get a little raised when both land under the same roof. I wonder if you feel the same?
You see, I’m just a little fish in the sea and I do pretty well but imagine if suddenly I can’t match the big company prices because I don’t get the materials for that cheaper ‘insider price.’ Oh and PLEASE don’t tell me this wouldn’t ever happen because it already does and has for years. My distributors ALL have discounts for “volume” buying and even tell me how close I am to the next level where I’ll get a better price on my purchases. Buy like the big companies and get the big company discounts, it’s a fact. Again -free market- & I really have no problem with it but imagine the discounts and ordering power when you own and control the chemical supplier. Prices & rules can suddenly be what ever you say and being the #1 company you could push smaller distributors out. The competition may have a tough time keeping up and this has happened several times before in many industries.
Is This A Monopoly?
When you research monopolies the first and most powerful example is that of Standard Oil which was broken up by the federal government in 1911. Many of their business practices were deemed unfair, unlawful and highly lethal to competitors. They owned or had significant control of almost every major aspect of the oil business at that time but railroads seem to be their biggest leverage point. While railroads charged a certain fee for smaller oil companies to ship barrels of oil, Standard got the same for pennies on the dollar. When the competition banded together to build a pipeline to beat the high priced rail system, the railway commission (in the pocket of Standard Oil) denied them permission to cross critical railway land. Every turn by the competition was met with a heavy handed crushing blow & there was little that could be done about it as the giant just got bigger, hungrier & devoured more. There are many more examples besides the rails of how the industry was controlled by just a few powerful people and even in the end when the Supreme Court stepped in, loopholes and favorable laws still allowed for fortunes to be made & smaller companies to languish. Does the name Rockefeller ring a bell?
Still, I’m not the sharpest knife in the drawer and the definition of monopoly doesn’t seem to fit the bill 100%. We’ve still got other international companies that are serious players and stand in the way of a one world order in pest control. Orkin, Rentokil and the sea of us smaller operators who thankfully with the intranet have a bigger voice than ever before. So I put the definition of 3 possibilities of what this “merger” could be classified. I’d love to hear from you and see what you think. Perhaps it’s not all that bad, maybe I’m off base. So I leave you with this question; Is this power play good for the pest control industry and does it classify as a monopoly, monopsopy or is it a good old oligopoly that we have nothing to fear? ( oh & don’t worry bout the big words-I had no idea what they meant either until I began research for this article.) Maybe it’s time we all learned the meaning however, you know before this train gets too much momentum and can’t be stopped.
In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.
A market similar to a monopoly except that a large buyer not seller controls a large proportion of the market and drives the prices down. Sometimes referred to as the buyer’s monopoly.
People have accused Ernest and Julio Gallo (the big wine makers) of being a monopsony. They had such power buying grapes from growers, that sellers had no choice but to agree to their terms.
Is the middle ground between monopoly and capitalism. An oligopoly is a small group of businesses, two or more, that control the market for a certain product or service. This gives these businesses huge influence over price and other aspects of the market. Since it is the middle ground, oligopoly examples are abundant in our economic system today.
What say you?