Preventing the Curse of Bigness Through Conglomerate Merger Legislation

The antitrust laws, as they are presently interpreted, are incapable of blocking most of the very largest corporate mergers. They successfully blocked only 4 of the 61 largest finalized mergers and acquisitions (defined as the acquired firm being valued at more than $10 billion) that occurred between 2015 and 2018. The antitrust laws also would permit the first trillion-dollar corporation, Apple, to merge with the third largest corporation, Exxon/Mobil. In fact, today every U.S. corporation could merge until just 10 were left – so long as each owned only 10% of every relevant market. Even though the Congresses that enacted the anti-merger laws did so in part to limit the political power of corporations, today the federal antitrust agencies and courts interpret these laws only in terms of price and other consumer effects within discrete markets. Under current merger practice, the enhanced political power of corporations is irrelevant. However, from Senators Elizabeth Warren and Bernie Sanders on the left, to President Trump and many others on the right, there is a renewed interest in using antitrust to control corporate size, structure, and practices. There is popular desire both to prevent large mergers and to break up existing companies, such as Facebook and Google, that achieved their dominant positions in part due to acquisitions. In light of recent developments along most of the political spectrum, this Article proposes model conglomerate merger legislation suitable for our era. This legislation would target every merger that exceeds clearly specified asset thresholds. We are proposing a law that would block every merger in which both firms have assets exceeding $10 billion. This threshold would block approximately 15-25 of the largest mergers each year. This Article undertakes a legal, economic, and political analysis of conglomerate merger legislation. This demonstrates that our proposed legislation would: 1. Produce no significant losses in corporate efficiency; 2. Be clearer and more predictable than the existing anti-merger laws and thus would enhance the rule of law; and 3. Help prevent significant increases in corporate political power and other forms of non-economic power caused by the largest mergers.