Mergers and Acquisitions in Digital Markets

"Some Members of Congress have expressed concern about mergers and acquisitions in digital markets, specifically those involving “Big Tech”—Alphabet (Google), Amazon, Apple, Facebook, and Microsoft. Mergers can be separated into three categories: (1) a merger between competitors (i.e., horizontal merger), (2) a merger with a firm in the supply chain (i.e., vertical merger), and (3) a merger with a firm in an unrelated or adjacent market. Some Members have specifically raised concern about Big Tech companies’ acquisitions of nascent firms, which can occur across all three categories. A merger could potentially increase or decrease competition in digital markets, depending on the characteristics of the markets involved.

Section 7 of the Clayton Act prohibits mergers whose effect “may be substantially to lessen competition, or to tend to create a monopoly” (15 U.S.C. §18). Citing this law, the Antitrust Division of the Department of Justice (DOJ), the Federal Trade Commission (FTC), state attorneys general, and private parties can challenge mergers. Merging parties that meet certain conditions must file a premerger notification with the FTC and DOJ under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (HSR Act). After investigating a proposed merger, the agencies can (1) allow the transaction to proceed unchallenged, (2) allow the transaction to proceed after entering a consent decree with the merging parties with conditions to maintain competition in the market, or (3) seek to stop the transaction by filing suit in federal court. The FTC and DOJ have not sued to block a proposed merger involving Big Tech since 2000; during this time, the Big Tech companies acquired at least 710 companies..."
Mergers and acquisitions 

Investigation of Competition in Digital Markets

"On June 3, 2019, the House Judiciary Committee announced a bipartisan investigation into competition in digital markets,2 led by the Subcommittee on Antitrust, Commercial and Administrative Law.3 The purpose of the investigation was to: (1) document competition problems in digital markets; (2) examine whether dominant firms are engaging in anti competitive conduct; and (3) assess whether existing antitrust laws, competition policies, and current enforcement levels are adequate to address these issues.4 The Committee initiated the investigation in response to broad-ranging investigative reporting, and activity by policymakers and enforcers, that raised serious concerns about the platforms’ incentives and ability to harm the competitive process.

As part of the investigation, the Subcommittee held seven oversight hearings that provided Members of the Subcommittee with an opportunity to examine the state of competition in digital markets and the adequacy of existing antitrust laws. A diverse group of witnesses offered testimony on topics related to the effects of market power on the free and diverse press, on innovation, and on privacy. Other witnesses who testified included executives from businesses with concerns about the dominance of the investigated firms. The hearings also provided an opportunity for key executives from Facebook, Google, Amazon, and Apple—including the Chief Executive Officers of these firms— to address evidence that was uncovered during the investigation in a public-facing venue. After each of the hearings, Members of the Subcommittee submitted questions for the record (QFRs) to the witnesses.

The Committee requested information from the dominant platforms, from market participants, from the Federal antitrust agencies, and from other relevant parties, for the purpose of obtaining information that was not otherwise publicly available but was important to assembling a comprehensive record. The Committee also sent requests for submissions to various experts in the field, including academics, representatives of public interest groups, and practicing antitrust lawyers. The responses to these requests were indispensable to staff’s ability to complete this Report and its recommendations for congressional oversight of the antitrust agencies and legislative action.

This Report is intended to provide policymakers, antitrust enforcers, market participants, and the public with a comprehensive understanding of the state of competition in the online marketplace. The Report also provides recommendations for areas of legislative activity to address the rise and abuse of market power in the digital economy, as well as areas that warrant additional congressional attention..."
Digital Markets