FTC scrutinizes Alphabet, Amazon, Apple, Facebook and Microsoft acquisitions
The FTC will investigate the acquisitions Alphabet, Amazon, Apple, Facebook and Microsoft have made in the past ten years. In particular, the aim is to gain a better understanding of the acquisitions of smaller companies and the potential impact on competition.
The US Federal Trade Commission focuses specifically on those acquisitions that are not subject to a statutory notification requirement. Under the so-called Hart-Scott-Rodino Act, US companies must first notify a takeover of companies of a certain size, but that does not apply to transactions involving small businesses. A provision of the FTC Act allows the regulator to conduct broad-ranging investigations that do not have a direct legal enforcement purpose; the current initiative stems from this authority.
The limit at which the regulator can investigate acquisitions is currently at 90 million dollars; For example, if Google wants to acquire a company valued at $85 million, no formal notification process is required. But if such a company is worth $100 million, it must be officially disclosed and the FTC can request more information within 30 days to determine whether the transaction violates the law or has an anticompetitive effect. for the specific market.
The FTC specifically targets the five major tech companies mentioned; they must provide information and documents on the terms, scope, structure and purpose of the intended transactions that they conducted between January 1, 2010 and December 31, 2019. This data and information should help the FTC increase its knowledge of the takeover behavior of large tech companies. This should also clarify whether these companies are potentially anticompetitive acquisitions of potential competitors or competitors in the making. The FTC also wants to know how the small businesses perform after they are acquired.
Joe Simons, the chairman of the FTC, says this initiative will enable the Commission to look more closely at acquisitions in this sector and evaluate whether federal agencies are receiving adequate notifications of acquisitions. Ultimately, the goal is to keep technology markets open and competitive for the benefit of consumers.
The FTC also leaves it open whether, based on the information to be obtained and its study, it will intervene more vigorously and possibly even try to reverse certain transactions, whether or not through the courts. “If we see problematic transactions during the investigation, all options are on the table,” Simons said in a statement to Politico. In any case, no far-reaching actions are expected for the time being; Simons said that for now the investigation is mainly aimed at looking at whether the FTC rules on mergers and acquisitions supervision need to be adjusted. This could, for example, mean that the threshold for reporting a merger or acquisition should be lowered.
Andrew Gavil, a former FTC official and a law professor at Howard University, told Politico that US judges have made it more difficult in recent decades for plaintiffs to win in court on pleas that a particular takeover violates law. the competition rules. This is because, based on case law, more and more economic evidence is needed to establish that a particular takeover is harmful to consumers.
Based on data provider Pitchbook, the Protocol website reports that Alphabet, Amazon, Apple, Facebook and Microsoft have acquired more than five hundred companies in the past ten years, a large part of which are formed by relatively small companies.