Among these voices, for example, is Senator Elizabeth Warren, who called for tight merger restrictions for companies that have more than $40 billion in annual revenues. In a fall 2019 presidential-candidate debate, she said: “We need to enforce our antitrust laws, break up these giant companies that are dominating Big Tech, Big Pharma, Big Oil, all of them.” Earlier this month, Senator Amy Klobuchar, together with four co-sponsors, proposed including a corporation’s absolute size in merger analysis. In October 2018, Senator Bernie Sanders introduced a bill that would break up the largest financial institutions in the United States and establish a cap on size going forward.
John Newman: What democratic contenders are missing in the race to revive antitrust
Although conservatives in the United States have generally supported Big Business interests, more voices on the right are grafting concerns about corporate power, particularly in digital markets, onto an otherwise standard right-wing agenda. Although former President Donald Trump’s administration had a poor antitrust record against large corporations and supported pro-monopoly reinterpretations of the law, it did file landmark suits against Google and Facebook in the closing months of 2020. Embracing some forms of economic populism, media outlets such as The American Conservative have also become supporters of renewed antitrust enforcement.
Building on ideologically diverse opposition to corporate consolidation, Congress should pass legislation that strikes at mergers, a major contributor to the curse of corporate bigness. A ban on mergers involving companies that have more than $10 billion in assets might be a somewhat arbitrary line to draw—Congress could reasonably choose a higher or lower threshold—but the formulation and administration of law, which establishes the rules of a market, requires a degree of line-drawing. Anyway, the status quo, in which virtually every merger goes forward, almost regardless of the potential damage to customers, suppliers, rivals, workers, and even democracy, is arbitrary in its own way and runs contrary to the public interest.
Under the legislation we propose, a future merger between Chevron and ExxonMobil would be plainly illegal. Even if they agreed to sell some assets to a third party—as many merging companies do—the two oil titans would not be able to get their transaction past the antitrust authorities. The companies probably would not even contemplate such a combination in the boardroom.
By establishing a bright line, an outright ban on the largest mergers would reduce the role of contending lobbyists, lawyers, and rented economists in merger cases, thereby making the whole process clearer, faster, more predictable, less expensive, and less subjective, as we explain at greater length in a recent law-review article. A ban on megamergers would reduce the amount of money and human energy currently wasted in putting together unproductive consolidations. It would help end the arms race of consolidation, in which mergers beget mergers as firms try to keep up with ever larger and more powerful corporate rivals, suppliers, and customers. By potentially channeling these resources into new productive capacity and technologies, the law could result in a real increase in society’s overall wealth and pace of progress.