MSNBC Opinion - Why Americans should worry about Subway’s new ownership

In an MSNBC column by Helaine Olen, Open Markets Chief Economist Brian Callaci describes private equity ownership of multiple sandwich chains as “an illusion of choice.”

If completed, the $10 billion deal will hand control of 40,000 sandwich shops across the United States -- more than twice the footprint of either McDonald’s or Starbucks — to private equity firm Roark Capital. If this deal follows other cases of corporate concentration, it will likely be bad for workers, bad for franchise owners, bad for food suppliers and bad for your wallet.

Roark (yes, the name is a nod to Howard Roark from Ayn Rand’s “The Fountainhead”) already owns sandwich chains Jimmy John’s, McAlister’s Deli and Schlotzsky’s, which Subway’s agreement with franchisees lists as competitors, as well as Arby’s, another fast-food chain. If you have multiple separate brands, “but they’re all owned by the same private equity firm, it’s not really any choice at all,” Brian Callaci, the chief economist at the Open Markets Institute, told me. “It’s an illusion of choice.”

Monopolies and oligopolies (where a market is controlled by a small number of producers) give companies the power to push through price increases because customers have fewer options. More than a few observers believe the inflation of the past few years was accelerated by food and agricultural giants — aka “greedflation.” As Time magazine pointed out last year, four corporations are responsible for 60% of the market share for such dietary staples as pork, cookies, pasta and coffee.

Read full article here.