Little THREAD on killer mergers. Not meant to be scientific, but to open our eyes on magnitudes.
2001-2018: Google has been buying 1 firm per month, every month, for the past 17 years. 1/
en.wikipedia.org/wiki/List_of_m…
2001-2018: Google has been buying 1 firm per month, every month, for the past 17 years. 1/
en.wikipedia.org/wiki/List_of_m…
Since 2010, rate up to 1 firm every 18 days. 99% of the deals not vetted by ANY competition authority for a variety of reasons (rest approved).
Proposals (non exclusive):
-Thresholds based on turnover work ok for mature industries, not for digital and pharma for instance. 2/
Proposals (non exclusive):
-Thresholds based on turnover work ok for mature industries, not for digital and pharma for instance. 2/
-Value of transaction contains information to be used in the assessment, and can be compared with financial analysis to spot possible preemption rents (large unexplained payments)
-“Potential competition” is super important: current “more likely than not” standard is not right.3/
-“Potential competition” is super important: current “more likely than not” standard is not right.3/
-Good rule should be symmetric around social value created by good/bad decisions: now we under-enforce as we don’t look into these deals
-Use “expected consumer surplus”. Probability of future competition (with large future gains) can be sufficient to optimally block mergers.4/
-Use “expected consumer surplus”. Probability of future competition (with large future gains) can be sufficient to optimally block mergers.4/
-This is not revolutionary: in merger control, we always compare if a merger is likely to restrict competition relative to how the market would have evolved absent the transaction
-Think of forward-looking counterfactuals that differ from the pre-merger equilibrium. 5/
-Think of forward-looking counterfactuals that differ from the pre-merger equilibrium. 5/
-And you’d have documents: see e.g. Mark Zuckerberg’s recent leaks
-For superdominant companies: strengthening of dominant position is enough? Can also shift the burden of proof: parties must show efficiencies, else adopt anti-competitive presumption. 6/
-For superdominant companies: strengthening of dominant position is enough? Can also shift the burden of proof: parties must show efficiencies, else adopt anti-competitive presumption. 6/
-For academics: please keep doing the great work of @florianederer, @cunningham_lbs and Song Ma (about 7% killer acquisitions in their sample of 35,000 pharma projects)
-Look at G, but also FB, and MS...
-Super valuable to learn from these studies. 7/
-Look at G, but also FB, and MS...
-Super valuable to learn from these studies. 7/
-For usual bunch of conservatives. Please don’t start with critiques to preserve status quo: these deals may not all be bad (who said that?), entrepreneurs invest to be bought (fine, but not by dominant companies), etc. Open your eyes. Think of solutions. 8/8
