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>This is de-facto the case. Mergers are monitored by the FTC etc. subject to a lot of scrutiny. No, it's not the case. Only mergers between two large companies

>This is de-facto the case. Mergers are monitored by the FTC etc. subject to a lot of scrutiny. No, it's not the case. Only mergers between two large companies are monitored and then they are allowed to go through most of the time. What I'm talking about is banning all M&A (and even certain asset purchases) where _one_ of the companies involved has more than, say, $20bn revenue (or some industry specific metric). Large companies would only be allowed to grow organically. Obviously startups and VCs would hate the idea, because it would block one of the most favoured exit strategies. What it would mean is that startups would have to sell themselves to medium sized companies, join forces with each other, and/or go public and compete with the giants.

jariel 7y ago
Yes, it's 100% the case that the FTC reviews all M&A of sizes substantially smaller than $20B in revenue. There are reporting requirements, and it's something like if the merged entity has >$200M assets (I'm not sure of the details but something like that), they have to report the merger to the FTC beforehand. The FTC probably should allow most mergers to go through. It would likely not be efficient for companies to not be able to acquire one another beyond a certain scale, I suggest deference should be given to the liberal side of the equation, with regulation affecting only within certain constraints. The hard part really is defining those constraints, and determining what constitutes anti-trust. AWS massive subsidy of their delivery operations putting FedEx out of business by shipping for less than cost would be ... problematic. Taking Search profits and giving away Android for free is a form of dumping. But then without this, some entire industries might not exist!
- fauigerzigerk 7y ago
  >Yes, it's 100% the case that the FTC reviews all M&A of sizes substantially smaller than $20B in revenue. Maybe so, but it is not the case that mergers get blocked purely based on the size of the companies involved. It's simply not lawful for the FTC (or other regulators) to do so. >The FTC probably should allow most mergers to go through. That is the status quo and it is clearly unsatisfactory in some areas. >I suggest deference should be given to the liberal side of the equation, with regulation affecting only within certain constraints. I completely understand why you are saying that, and it has always been my preference as well. But the problem is that these constraints have become so difficult to specify that the likelihood of ineffective, counterproductive or abusive regulation has risen dramatically. That's why I'm wondering whether it wouldn't be better to accept that size itself invevitably creates problems that no case by case game of what-a-mole will ever solve. We need simpler rules that can be consistently enforced. I'm far from convinced that my particular idea is any good. I'm just putting it out there as an example for the kind of simplicity that I think we need.

jariel 7y ago

Yes, it's 100% the case that the FTC reviews all M&A of sizes substantially smaller than $20B in revenue. There are reporting requirements, and it's something like if the merged entity has >$200M assets (I'm not sure of the details but something like that), they have to report the merger to the FTC beforehand. The FTC probably should allow most mergers to go through. It would likely not be efficient for companies to not be able to acquire one another beyond a certain scale, I suggest deference should be given to the liberal side of the equation, with regulation affecting only within certain constraints. The hard part really is defining those constraints, and determining what constitutes anti-trust. AWS massive subsidy of their delivery operations putting FedEx out of business by shipping for less than cost would be ... problematic. Taking Search profits and giving away Android for free is a form of dumping. But then without this, some entire industries might not exist!

fauigerzigerk 7y ago
>Yes, it's 100% the case that the FTC reviews all M&A of sizes substantially smaller than $20B in revenue. Maybe so, but it is not the case that mergers get blocked purely based on the size of the companies involved. It's simply not lawful for the FTC (or other regulators) to do so. >The FTC probably should allow most mergers to go through. That is the status quo and it is clearly unsatisfactory in some areas. >I suggest deference should be given to the liberal side of the equation, with regulation affecting only within certain constraints. I completely understand why you are saying that, and it has always been my preference as well. But the problem is that these constraints have become so difficult to specify that the likelihood of ineffective, counterproductive or abusive regulation has risen dramatically. That's why I'm wondering whether it wouldn't be better to accept that size itself invevitably creates problems that no case by case game of what-a-mole will ever solve. We need simpler rules that can be consistently enforced. I'm far from convinced that my particular idea is any good. I'm just putting it out there as an example for the kind of simplicity that I think we need.