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You're basically advocating for unscrambling the omelet to be easier. Should be obvious why it's harder to unmix than it is to mix.
by vlovich123 2mo ago
You're basically advocating for unscrambling the omelet to be easier. Should be obvious why it's harder to unmix than it is to mix.
- makeitdouble 2mo agoWhy skip this part ? > legislation needs to either make it just as hard to merge two companies as it is to unmerge them
- Arainach 2mo agoNothing was skipped - the point is that this is directly analagous to unscrambling an omelet. Separating mixed things is significantly more difficult than mixing them. "The laws says X" doesn't change whether X is possible or not.
- edgyquant 2mo agoIt’s quite literally not analogous as breaking up companies has happened a bunch but no one has ever unscrambled an omelet
- positr0n 2mo agofwiw I thought it was a good analogy. Sure splitting a company is possible and scrambling an omelette is not, but it sure takes a lot more effort to effectively undo entropy. In a merger you can take as long as you want to go from 1. Two separate companies except at the end of the quarter we add their revenue and expenses together in a spreadsheet to transition to 2. One fully integrated organization And usually you are becoming more efficient and saving time and money as you integrate. Splitting a company needs to happen quickly or you'd get all sorts of weird effects where coworkers are ostensibly competitors whilst sharing resources during the transition. And you have to expend a huge amount of effort. Just a couple random complex systems that need to be untangled off the top of my head: physical property and leases, IP space for every IT service you run, multi-year contracts with every vendor from janitorial to SaaS, multi year contracts with customers depending on how the split goes, and of course all the intermingled finances and HR and spreadsheets every company in the world lives on. I'm sure there's thousands more considerations. I agree antitrust is a big problem that needs to be solved. But "it should be the same amount of effort to merge and split a company" is just fantasy.
- saghm 2mo agoDo you really think it's impossible to pass legislation that makes something that's currently easy hard without making the reverse any harder as well?
- Arainach 2mo agoYes, because the difficulties in separating integrated pieces have nothing to do with a merger. What makes splitting a company out difficult isn't (directly) a financial or paperwork burden - it's that tightly integrated systems are very difficult to untangle. There is nothing analagous that could be introduced in the merger process. You could add a mandatory delay, but that's not making it "as hard", it's just making it slower.
- saghm 2mo agoI don't understand why you think the only possible ways to make mergers harder need to be "analogous". If they put a hard cap on the size of companies allowed to merge, that would make it harder, without making it harder to break them up. It's hard to take seriously the idea that you think there's literally no possible legislation that could end up changing the relative difficulty in the way the parent comment describes when I was able to come up with an insanely trivial example without needing to think about it for more than a couple minutes.
- computably 2mo agoThe law could make mergers executed provisionally for up to X years, with a binding plan to "unmerge" that must be updated every Y months. The FTC already half-does this with post-merge divestiture requirements.
- deleted 2mo ago[deleted]
- xahrepap 2mo agoI’m advocating for controlling the damage. The way I said it is cutesy, not literal. I intended it to point out that it’s too easy to merge companies together but it’s effectively impossible to stop someone from becoming anticompetitive without a real consequence. If we can’t make it easier to rip them apart then we shouldn’t be so slap-happy about approving them in the first place.
- romanows 2mo agoI don't think it's particularly unusual for a company to spin off another company?
- rectoverso 2mo agoPE companies do it all the time.
- Arainach 2mo agoPE companies do it with very little regard for if any of the pieces are viable and survive after the fact, so their model isn't one I'd suggest following.
- saghm 2mo agoMaybe if a large company is anticompetitive and the parts would not survive on their own, we should be letting those pieces fail
- nradov 2mo agoFrom a public policy perspective it doesn't matter if some pieces are unviable and fail to survive. Across the entire economy, this creative destruction allows for quickly reallocating resources to more productive uses. Most of the companies that take PE investments do so because they're badly managed and unable to obtain capital from other sources; they would likely fail anyway. At least the PE investment gives them a chance to survive and brings in more financially disciplined management.
- RetroTechie 2mo agoThere's many examples of companies who were conducting a low growth, long-term viable business. And where then PE stepped in, ripped out the most profitable part(s), and discarded the less-profitable parts as a dead husk. In the process, the public lost the benefit that less-profitable part provided. Besides ripping up a company that was doing fine as-is. You call that "reallocating resources to more productive uses". Yes that may be what's happening in some cases. But not always. Less-profitable != non-beneficial to the public. At this point I regard PE entities as value-extraction machines. Which sometimes, but rarely, work with the public's benefit in mind. And let's not get started on cases where PE secured loans, sold off a company's assets, only to lease them right back. Leaving company deprived of their assets & debt-laden, going under shortly after, while PE firm runs off with the goodies. Most people would think of that as theft & destruction. But in high-finance world it's named differently & somehow legal.
- yndoendo 2mo agoSplitting a large company is already done to shed and transfer liabilities. Divisional Merger Tactic / Texas Two Step. [0] [1] Keep the yoke and drop the albumen with time and patience. [0] https://batesonlaw.com/divisional-merger-tactic-how-liability-is-isolated-before-filing/ https://batesonlaw.com/divisional-merger-tactic-how-liabilit... [1] https://www.creditandcollectionnews.com/u-s-supreme-court-declines-case-over-texas-two-step-bankruptcy-tactic/ https://www.creditandcollectionnews.com/u-s-supreme-court-de...
- saghm 2mo agoNo, they're advocating for more scrutiny of whether the omelet is going to be very bad for everyone who isn't part of the omelet (yes, this metaphor is weird, but I didn't introduce it)
- otterley 2mo agoThat’s one half. The other, more interesting half, recognizes that unscrambling the egg is difficult, so we must take more precautions before scrambling it in the first place.
- Grombobulous 2mo agoI’ve been saying that an easy solution is just don’t allow companies with even modestly large overall sizes to merge or acquire other companies. At all. For any reason. I think that despite this reform being a blunt instrument it would work surprisingly well. It would allow companies that should have declined to decline and it would give massive incumbents a major incentive to innovate in-house.
- ryandrake 2mo agoYou can bet that if the board of directors could show that unscrambling the omelet would result in greater shareholder value produced, it would suddenly be really easy to do...
- teaearlgraycold 2mo agoOn a technical level it would still be a nightmare. But yes it would actually get done.
- NeutralWanted 2mo agoMy first tech job was at HP, in 2015, started there just in time work and live through that split. That was a smoother one from what I hear but it was not a fun job to have at the time
- qlte 2mo agoHappened with Dow-Dupont! A three-way split, even (from a two-way merger). Took roughly two years and was the shareholders' plan from the start. By most accounts it went very smoothly. [1] https://www.investors.dupont.com/news-and-media/press-release-details/2017/DowDuPont-Merger-Successfully-Completed/default.aspx https://www.investors.dupont.com/news-and-media/press-releas... [2] http://www.dow-dupont.com/ http://www.dow-dupont.com/
- schmidtleonard 2mo agoProgressive corporate taxation could make it happen for reasons other than dodging the ghosts of chemical sins past!
- briandear 2mo agoCan we stop with taxing everything you don’t like? Taxes should be equal and used to fund the government, not as tools to make people do things you like.
- manvillej 2mo agoEh, thats a bit of a False analogy. spinning off a division of a company is easier than fully integrating another.
- patcon 2mo agoYes, this is obviously the ask: why doesn't government unmix the omelet. Your very body unscrambles the omelet and makes you. It's what intelligent things do when they are moving agency into the proper places. what is the purpose of regulation except to resist entropy in such strategic places?
- schmidtleonard 2mo agoProgressive corporate taxation would give the market an incentive to do spinoffs and undo the merger wave. Or we could just roll antitrust policy back to what it was before Ronald Reagan and Robert Bork installed the Consumer Welfare Standard, the idea that companies must be allowed to merge if they can scribble a tall tale with crayons on butcher paper about how the merger will benefit consumers, for sure, pinky promise. This is obviously mega-rigged, it comes from the Robber Baron era, it was defeated before (look up Louis Brandeis) and it can be defeated again (look up Lina Khan). They didn't even change the talking points (dontcha know, the Standard Oil monopoly reduced the price of Kerosene by 70%?!) -- time is a flat circle when it comes to anti-trust policy. Let's spin it back to the part of the circle where we win.
- pocksuppet 2mo agoProgressive corporate taxation would lead to every company splitting its revenue and expenses across 50 shell companies, without actually splitting operations.
- psd1 2mo ago...which is common today. I like globalisation on its face. The second-order effects are a bitch. I don't want to go full protectionist, bit we should swing the needle back a bit.
- schmidtleonard 2mo agoNot if the gaggle of shell companies was difficult to invest into or had enough rights to make it a strategic threat. But sure, wave those infomercial-hands some more and maybe you'll convince me that I can't use a screwdriver.
- EA-3167 2mo agoUndoing mistakes is usually difficult and costly, but still worth doing on the road to not making the mistake again. Grandfathering in the subversion of the economy and our democracy is worth fighting.
- insane_dreamer 2mo agolarge corporations spin off divisions into separate companies all the time
- UpsideDownRide 2mo agoThat is about as bad of an analogy as you can make
- account42 2mo agoHe's saying that if we can't unscramble the omelet then we should make damned sure the omelet will be healthy before allowing it to be scrambled.