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> Mergers are rejected all the time I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law

by stale2002 6y ago

> Mergers are rejected all the time I really would not consider the current situation to be one where regulators are doing strong enforcement of anti-trust law. Regulators are really not doing much regulating right now, on the anti-trust and anti-competition front, and regulators not doing much regulating in these new markets where they definitely should be. I am not sure how you could possibly look at the current state of some of these rare expectations of monopoly behaving companies, and claim that regulators are doing their job. > I would say in the US mergers tend to skate through Well then this concession is good enough to support my point. > You haven't posited a theory at all for why consolidation Well I don't need to. All I have to do is point to the existence of lots of markets that are competitive, and point out that regulators that aren't regulating. The reason doesn't matter as long as I point to the clearly true fact that regulators aren't doing much regulating in some of these markets. But, one possible theory is that consolidation also reduce competition, and can cause companies to stagnate, and can reduce innovation in that market. You would have to argue that no startups ever could succeed in the face of "scale" (something that is clearly not true. Startups suceed all the time), if you are going to argue that scale is such an overwhelming advantage that inevitably causes every single company in that market to join together. Also, different companies run differently, and this can give them advantages in some things, and disadvantages in others, allowing them to overcome scale problems, due to the advantage/disadvantage of merely being different. Heterogeneity in companies allows them to target niches and stay in the market.

arcticbull 6y ago
I’m sorry you’ve made a very uncompelling case for me. You fail to address the directionality inherent in all my data preferring to instead point at the current state as though it’s terminal and natural. I just don’t see it that way. Thanks for your perspective however!
- stale2002 6y ago
  I mean, you already conceeded that the US isnt doing much enforcement or regulation of competition. So that already establishes the point.
  - arcticbull 6y ago
    My point was that once you reached a certain scale the US regulatory environment is less relevant than the strictest regulatory environment in which you do or hope to do business. It’s not sufficient for Ford and GM to merge with only the US gouvernements blessing as they do business in Europe and the EU would never permit it. They’d need sign off from the EU, US, CA, AU, CN, etc.
    - stale2002 6y ago
      > the US regulatory environment is less relevant than the strictest regulatory environment in which you do or hope to do business. I would really recommend that you become more informed on the issue of EU anti-trust enforcement. I just did a bunch of research myself. Here is a source from quoting the EU president himself. https://www.reuters.com/article/us-eu-competition-juncker/juncker-rejects-gripes-that-eu-blocks-mergers-idUSKCN1PU0SY https://www.reuters.com/article/us-eu-competition-juncker/ju... "Juncker said the Commission had only ever blocked 30 mergers and approved more than 6,000." https://www.jonesday.com/en/insights/2020/06/eu-court-raises-bar-for-commission-to-block-certain-mergers https://www.jonesday.com/en/insights/2020/06/eu-court-raises... Source showing how weak EU anti-trust enforcement is After doing more research, is clear that the EU is doing much less enforcement against merges than even I previously thought, and I am now going to claim that the EU regulators aren't doing much enforcement either. Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value. Furthermore, I can only find a single example, in the history of EU anti-trust law, of the EU blocking a US merger. And that was in 2001 regarding a GE acquisition. If there is only a single example, in the history of EU anti-trust law, of the EU blocking a EU merger, a whole 20 years ago, then it is pretty clear that the EU is not doing much enforcement against US mergers. So my point stands. You concede that the US is not doing much enforcement of anti-trust law. And the fact that the EU has only ever been successful in doing so a single time, 20 years ago, means that the EU is pretty irrelevant to this conversation as well.
      - arcticbull 6y ago
        > Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value. Again, the number of blocked vs approved isn't particularly relevant. What matters is also the number that weren't tabled in the first place, and obviously, the number of things that didn't happen is a particularly challenging set to count. Companies aren't fond of public failure, and so they'll try and suss out whether regulators would be amenable to a merger before making it public. 6,000 vs 30 is a meaningless metric, because 6,000 small companies merging into 3,000 small/midsize companies isn't relevant to this discussion as it doesn't do much to alter the competitive landscape. 30 mega-caps merging into 15 giga-caps is what I'm talking about. I'm not saying companies should never merge, that's fine, it's in their competitive interest to do so. Mergers are good for companies because they reduce competition and improve margins. Again, what you haven't explained is why a small company merging into a small company is advantageous, a mid size into a midsize is advantageous, but a giant into a giant just wouldn't ever work. Of course it would work, the same dynamic continues to exist. Regulators are why. T-Mobile just acquired Sprint, right? So we know there's certainly an advantage on the business front to consolidate these businesses. So why doesn't AT&T buy T-Mobile to form AT&T&T? Well, they tried in the early 2010s and the DOJ filed suit is why. [1] Further AT&T had to pay a huge amount of cash to T-Mo when it all unwound. [1] https://som.yale.edu/sites/default/files/ATT%20-%20T-Mobile%20Merger%20analysis%20for%20website.pdf https://som.yale.edu/sites/default/files/ATT%20-%20T-Mobile%...

arcticbull 6y ago

I’m sorry you’ve made a very uncompelling case for me. You fail to address the directionality inherent in all my data preferring to instead point at the current state as though it’s terminal and natural. I just don’t see it that way. Thanks for your perspective however!

stale2002 6y ago
I mean, you already conceeded that the US isnt doing much enforcement or regulation of competition. So that already establishes the point.
- arcticbull 6y ago
  My point was that once you reached a certain scale the US regulatory environment is less relevant than the strictest regulatory environment in which you do or hope to do business. It’s not sufficient for Ford and GM to merge with only the US gouvernements blessing as they do business in Europe and the EU would never permit it. They’d need sign off from the EU, US, CA, AU, CN, etc.
  - stale2002 6y ago
    > the US regulatory environment is less relevant than the strictest regulatory environment in which you do or hope to do business. I would really recommend that you become more informed on the issue of EU anti-trust enforcement. I just did a bunch of research myself. Here is a source from quoting the EU president himself. https://www.reuters.com/article/us-eu-competition-juncker/juncker-rejects-gripes-that-eu-blocks-mergers-idUSKCN1PU0SY https://www.reuters.com/article/us-eu-competition-juncker/ju... "Juncker said the Commission had only ever blocked 30 mergers and approved more than 6,000." https://www.jonesday.com/en/insights/2020/06/eu-court-raises-bar-for-commission-to-block-certain-mergers https://www.jonesday.com/en/insights/2020/06/eu-court-raises... Source showing how weak EU anti-trust enforcement is After doing more research, is clear that the EU is doing much less enforcement against merges than even I previously thought, and I am now going to claim that the EU regulators aren't doing much enforcement either. Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value. Furthermore, I can only find a single example, in the history of EU anti-trust law, of the EU blocking a US merger. And that was in 2001 regarding a GE acquisition. If there is only a single example, in the history of EU anti-trust law, of the EU blocking a EU merger, a whole 20 years ago, then it is pretty clear that the EU is not doing much enforcement against US mergers. So my point stands. You concede that the US is not doing much enforcement of anti-trust law. And the fact that the EU has only ever been successful in doing so a single time, 20 years ago, means that the EU is pretty irrelevant to this conversation as well.
    - arcticbull 6y ago
      > Really I am quite surprised at how little the EU is doing, and should have looked that up much earlier, instead of taking your initial claim at face value. Again, the number of blocked vs approved isn't particularly relevant. What matters is also the number that weren't tabled in the first place, and obviously, the number of things that didn't happen is a particularly challenging set to count. Companies aren't fond of public failure, and so they'll try and suss out whether regulators would be amenable to a merger before making it public. 6,000 vs 30 is a meaningless metric, because 6,000 small companies merging into 3,000 small/midsize companies isn't relevant to this discussion as it doesn't do much to alter the competitive landscape. 30 mega-caps merging into 15 giga-caps is what I'm talking about. I'm not saying companies should never merge, that's fine, it's in their competitive interest to do so. Mergers are good for companies because they reduce competition and improve margins. Again, what you haven't explained is why a small company merging into a small company is advantageous, a mid size into a midsize is advantageous, but a giant into a giant just wouldn't ever work. Of course it would work, the same dynamic continues to exist. Regulators are why. T-Mobile just acquired Sprint, right? So we know there's certainly an advantage on the business front to consolidate these businesses. So why doesn't AT&T buy T-Mobile to form AT&T&T? Well, they tried in the early 2010s and the DOJ filed suit is why. [1] Further AT&T had to pay a huge amount of cash to T-Mo when it all unwound. [1] https://som.yale.edu/sites/default/files/ATT%20-%20T-Mobile%20Merger%20analysis%20for%20website.pdf https://som.yale.edu/sites/default/files/ATT%20-%20T-Mobile%...