The Atlantic - Ban All Big Mergers. Period.
Sandeep Vaheesan of Open Markets Institute writes in The Atlantic with Robert H. Lande of University of Baltimore School of Law about how a simple ban on all mega-mergers would stop the U.S. government from rubber-stamping corporate consolidation.
The oil giants ExxonMobil and Chevron each have assets valued in the hundreds of billions of dollars. Last year, The Wall Street Journal recently revealed, the two companies considered what would have been among the largest corporate mergers in history—a deal that would have reunited parts of the Standard Oil empire that federal trustbusters broke apart in 1911. In the end, ExxonMobil and Chevron didn’t attempt the transaction. But had the companies insisted on it, today’s antitrust authorities probably would have permitted the tie-up. Mergers among the very largest corporations are rarely stopped. Our research found that, out of the 78 proposed mergers from 2015 to 2019 in which the smaller firm was valued at more than $10 billion, the federal government attempted to block a grand total of only five on antitrust grounds and successfully stopped just three of them. In February 2020, a district judge allowed T-Mobile (with a premerger equity valuation of more than $50 billion) to acquire Sprint for $30 billion and gave control of the national wireless market to just three carriers.
As evidence mounts that corporate consolidation and concentration raise prices to consumers, eliminate jobs, depress wages, marginalize independent businesses, and breed economic and political inequality, Democrats in Congress, possibly in collaboration with some Republican colleagues, appear poised to crack down on monopoly and prevent further consolidation. At the top of this agenda should be a law that simply and unambiguously prevents all megamergers—which we would define as transactions in which the acquirer and the target each has more than $10 billion in assets.
Such a rule would have stopped dozens of mergers that were completed in the second half of the 2010s, including the acquisitions of SABMiller by Anheuser-Busch InBev, Aetna by CVS, and Monsanto by Bayer. In general, corporate consolidation does not improve business productivity. Melissa Schilling, a business professor at New York University, has concluded that “most mergers do not create value for anyone, except perhaps the investment bankers who negotiated the deal.” Those findings make the government’s willingness to rubber-stamp so many recent mergers all the more remarkable.
Read the full op-ed on The Atlantic here.