Scrambled Eggs and Paralyzed Policy: Breaking Up Consummated Mergers and Dominant Firms

Industrial and Corporate Change

48 Pages Posted: 14 Dec 2020 Last revised: 30 Jul 2021

See all articles by John E. Kwoka, Jr.

John E. Kwoka, Jr.

Northeastern University - Department of Economics

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Date Written: November 24, 2020

Abstract

Entrenched dominant firms and anticompetitive consummated mergers pose growing problems for antitrust agencies throughout the world. A lot of thought is being given as to how to address these situations but perhaps the most obvious idea—breaking up such firms—is generally dismissed as impractical, the equivalent of trying to unscramble eggs. We disagree. We show that there have been a substantial number of successful breakups of firms, some in antitrust, more in regulated industries, and even more in the private sectors of the U.S. and U.K. as firms initiate their own restructuring. We believe that a policy of breakups can have a much greater chance at success compared to efforts to regulate such firms through rule-making conduct remedies. And we argue that breaking up such firms is facilitated by the fault lines that reveal the natural break points of these heavily merged firms We recommend that breakups be on the policy menu for competition agencies.

Keywords: antitrust, breakups, merger, Big Tech

JEL Classification: G34, K21, L13, L22, L40

Suggested Citation

Kwoka, John E. and Valletti, Tommaso M., Scrambled Eggs and Paralyzed Policy: Breaking Up Consummated Mergers and Dominant Firms (November 24, 2020). Industrial and Corporate Change, Available at SSRN: https://ssrn.com/abstract=3736613 or http://dx.doi.org/10.2139/ssrn.3736613

John E. Kwoka

Northeastern University - Department of Economics ( email )

301 Lake Hall
Boston, MA 02115
(617) 373-2882 (Phone)
(617) 373-3640 (Fax)

Tommaso M. Valletti (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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