Larger firms dominating market due to Covid-19: IMF

The International Monetary Fund (IMF) has warned following the COVID-19 pandemic larger firms are dominating the market in advanced economies due a shift in market power.

A research paper released by the Fund this week highlighted that the pandemic significantly strengthened the market power of dominant firms, which could strain medium-term growth.

The ongoing scenario could also hamper innovation and investment efforts, it said.

“Due to the pandemic, we estimate that this concentration could now increase in advanced economies by at least as much as it did in the 15 years to end of 2015,” said IMF Managing Director Kristalina Georgieva.

She added that even in those industries that benefited from the crisis, such as the digital sector, dominant players are among the biggest winners.

While a driving factor for the concentration of market power was merger and acquisition activity, the IMF urged authorities to be increasingly vigilant when enforcing merger control.

Failure to regulate could harm users on one or both sides of the market as well as potential innovative entrants, it added.