4 ms·

Why are acquisitions legal? Is there ever a serious argument for how a company acquiring another company is net beneficial to users/customers?

• toomuchtodo 3y ago
  Because people want an avenue to exit for the time they've spent building.
• e_i_pi_2 3y ago
  I agree with you, but I think the main argument is that it lets companies provide better products and potentially cheaper prices from vertical integration. Sometimes acquisitions are only done for the human resources, and the customers of the acquirer now benefit from that person. If your competitor knows how to make the same product but cheaper, you can buy them and now your product is cheaper. In theory it makes tons of sense - why compete when we could work together? But as long as we're requiring companies to be profitable we can't also expect them to make decisions that are net beneficial - only net profitable, and the profit motive for wiping out competitors is clear
  • e_i_pi_2 3y ago
    This is also ignoring the kinda simple case of buying for IP - if you're a toy maker and you want to sell toys for movies, you can do that for free if you also own the movie and avoid licensing fees. Or maybe you need some specific patent and a competitor won't license it to you as long as they're in business because then you legally have to work at a disadvantage - IP is kinda by definition meant to hurt consumers for a period as a reward for the holder, so removing that would make the products better
• joshAg 3y ago
  > Why are acquisitions legal? It'd take at least semester of public policy, a semester of economics, a semester of history, and a semester of legal studies to adequately answer that. The shorter answer is that nonnatutal persons and natural persons have the same rights to do what they want with their property, barring very specific exemptions. One of those exemptions is monopolies, but (and add this to the list of shit Ronald fucking Reagan and the university of chicago screwed up, too) in the 1980s US anti-monopoly enforcement switched from focusing on ensuring a competitive marketplace to focusing on ensuring economic efficiency and consumer welfare, so it became much much much easier to merge and acquire competitors.
• gochi 3y ago
  That question is debated, and for good reason. I'm a fan of the limitations based on market cap and valuations. We really have done a terrible job at upholding Sherman's Antitrust act, instead allowing the very thing it was attempting to prevent, to come true. All under the facade of "innovation". Most arguments I've read on the issue are very telling. Arguments like we can't regulate M&A because they'll just invest elsewhere without M&A regulations. Which is great for several reasons: we should not want to protect companies that would that easily go elsewhere, and this assumes people need the company far more than the company needs people which is a gigantic problem in itself.
• tptacek 3y ago
  Because people generally have the right to negotiate and form agreements with one another, that being one of the basic applications of free association. Every time a company buys a part it uses to build a product, or hires a contractor to do a specialized job, it's doing the same fundamental thing as it is in an acquisition. That doesn't make the right unlimited; it isn't, and arguably it should be more tightly regulated. But disallowing acquisitions as a matter of policy would lead to weird results nobody wants.
• akerl_ 3y ago
  We don't legally limit companies or people to only doing things that are net beneficial to other people.