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Volume 105

Article

In Defense of Breakups: Administering a “Radical” Remedy

Rory Van Loo, Associate Professor of Law, Boston University; Affiliated Fellow, Yale Law School Information Society Project  

 

10 Nov 2020

Calls for breaking up monopolies—especially Amazon, Facebook, and Google—have largely focused on proving that companies like Whole Foods, Instagram, and YouTube are anticompetitive. But scholars have paid insufficient attention to a separate step in the analysis that may help explain why the government in recent decades has not broken up a single large company. After establishing that an anticompetitive merger or other act has occurred, there is great skepticism of breakups as a remedy. Judges, scholars, and regulators see a breakup as extreme, frequently comparing the remedy to trying to “unscramble eggs.” They doubt the government’s competence in executing such a difficult task, pointing to decision-making flaws dating back to the breakups of Standard Oil in 1911 and AT&T in 1984. Even scholars calling for more vigorous antitrust enforcement often recommend alternative remedies. 

This Article asserts that the pervasive hesitancy about administering breakups renders antitrust impotent in the face of monopolies—too often a statutory right without a remedy. More importantly, the Article challenges the perception of breakups as unadministrable. The intellectual foundations for the anti-breakup stance are weak, relying on outdated, anecdotal evidence. Moreover, antitrust needs a methodological shift toward paying greater attention to the breakup insights yielded by other disciplines. In particular, business scholars have studied how the world’s leading companies regularly break themselves up voluntarily. Additionally, administrative law scholarship has observed a broader evolution toward collaborative regulation that shows how the much-maligned historical approaches to antitrust remedies could be greatly improved by relying more on the business sector in designing and implementing breakups. In other words, insights from outside of antitrust address many critiques of breakups and show how the remedy is far from radical and messy. 

Antitrust observers should thus abandon the worldview that compares breaking up prior companies to unscrambling eggs. Or, at a minimum, they should recognize that scrambled eggs, once cooked, are divided into smaller portions. A greater willingness to do the same to monopolies in the post-merger context and beyond would bring regulators more in line with the business sector, which sees divestitures as a routine part of effective governance. 

To read more, please click here: In Defense of Breakups: Administering A “Radical” Remedy

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