CategoriesFlorida Law Review Forum
Professor D. Daniel Sokol’s prolific scholarly contributions to the field of antitrust are essential reading and his recent article on Vertical Mergers and Entrepreneurial Exit is no exception. In it, Professor Sokol draws upon a rich understanding of strategic management, entrepreneurship policy, and the start-up-funding ecosystem to offer a novel account of the rationales for and effects of certain merger and acquisition (M&A) activity. Professor Sokol juxtaposes his article against the rising popular backlash targeting large incumbent tech companies like Facebook, Google, and Amazon. In particular, Professor Sokol frames his thesis as a response to arguments that “vertical mergers by such firms (acquisitions of smaller tech companies) are to be treated with particular suspicion . . . .” Professor Sokol’s own descriptive thesis is, roughly speaking, that antitrust enforcement in dynamic markets may prevent firms from achieving certain efficiencies, and also runs the risk of chilling capital investment and start-up activity.
Normatively, Professor Sokol concludes that status quo vertical merger policy is optimal. These are intriguing insights, not yet well-recognized by the antitrust community. Antitrust discourse in general tends to lack a robust account of the incentives underlying corporate mergers and acquisitions. Instead, the prevailing view seems to be Manichean: mergers are either “procompetitive” or “anticompetitive.” In other words, many antitrust analysts seem to categorize mergers as either “good,” by which they mean efficiency-enhancing, or “bad,” by which they mean market-power-enhancing. The consensus seems to be that most mergers are good. This is especially true of vertical mergers. Read More.