back to article US mergers doubled in 2021 so FTC and DoJ seek new guidelines to stop illegal ones

The US Federal Trade Commission (FTC) and Department of Justice (DoJ) Antitrust Division are launching a joint public inquiry as a first step to modernising merger guidelines and preventing anticompetitive deals. "Times have changed because the advent of the digital economy has transformed industry," said the DoJ's assistant …

  1. HildyJ Silver badge
    Holmes

    Keep it simple

    Pick a big number. Based on top 10 in market cap $600m, revenue $250m, total assets $250b. Assets seem to be the most stable.

    Then ban any company with assets over $250b from acquiring any other company and ban any merger where the combined assets would exceed $250b.

    1. DS999 Silver badge

      Re: Keep it simple

      How does it hurt anything if a big company buys up some little company with 20 employees for $20 million? If that was banned they'd buy IP and leave a useless shell of the company behind or hire all the employees (via some sort of "all or none" contract deal for them all or at least the key ones) again leaving behind a useless shell. If that's banned then they acquire an exclusive license for the IP or have the employees all quit and form a consulting company and hire them as consultants.

      There will always be ways around it for small companies, even if you think that should be policed. Where it matters is big acquisitions like Facebook buying WhatsApp because they were so big and Facebook wanted to keep messaging inside their platform as much as possible.

      Even something pretty big like Microsoft buying Linkedin is arguably not a problem. Microsoft had zero involvement in Linkedin's market previous to the purchase. If Google or Facebook had bought it that would be a real problem, because they were already so tied into online advertising - including already doing online job ads - giving either a near monopoly of job ads thanks to the Linkedin tie-in would be a big problem in a way Microsoft buying them isn't.

      This is why it is stupid to try to attach dollar limits with any sort of complete ban. Just require scrutiny above certain dollar limits and exercise reasonable judgment.

      1. HildyJ Silver badge

        Re: Keep it simple

        Megacorps excel at justifying mergers and acquisitions. Trying to judge each M&A by the FTC's "reasonable judgement" just invites lawyers to fight over terms.

        As to your 20 employee company example, would it be such a bad thing if a slightly smaller corporation acquired them to better compete with the biggest boys?

        1. Jimmy2Cows Silver badge

          Re: Keep it simple

          You assume a slightly smaller corporation wants to acquire them. That's by no means a given.

          And slightly smaller corporation may be eyeing other targets, and if close to your blanket ban threshold they would have to pick a target. In your solution, you artificially limit which small biz can win.

          Without a threshold, slightly smaller corporation would be able to acquire all potential targets, which seems more beneficial to all the small biz involved.

    2. Jimmy2Cows Silver badge

      Re: Keep it simple

      Blanket assumptions can never work, simply because it's the nuanced detail that is important when evaluating potential for market abuse. Your approach just seems arbitrary, too broad, and cannot account for details, so would be doomed to fail and simply create a whole other set of problems.

      The issue is regulators don't have the necesary tools to determine where some digital businesses get their income and where the market touch points are, thus it's impossible to properly determine potential damage from a merger.

      Blanket acquisition bans based on arbitrary value threshold don't help.

    3. VicMortimer
      Mushroom

      Re: Keep it simple

      It's a good start, but think smaller. Companies that size are well past the point they should be allowed to acquire anything, they're so big they need to be forcibly broken up.

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