Can large companies simply buy large companies from smaller industries in order to a) get passive income and b) have alternate industries to fall back on?

Question

EDIT: And they just leave those sub companies as they are (provided they are already making profit), so the only thing that changes it that the excess profit could go to the whole company; they leave it to function the same

ALSO EDIT: Not necessarily passive income (mb) but just to expand the larger companies reach- theoretically could one country have non-negligible stakes in every major industry through this method?

Thank you all this was actually very helpful 😀

In: Economics

Answer 1

Yes. This happens all the time. Pretty much all the different beers you see at the store that isn’t from a small local brewery is owned by 3 companies. All the domestic beers, the Mexican lagers, the popular European brands, virtually none of them are standalone companies. Same story with all the different shampoos. P&G, Johnson and Johnson, and L’Oréal own almost all of them. There are certain laws against monopolies and occasionally these “mergers” will be blocked in court but it’s rare. Most industries have been consolidated by a few giant corporations.