Tech Giants Used 'Loopholes' To Duck Merger Reviews, FTC Says (bloomberg.com) 32
An anonymous reader quotes a report from Bloomberg: Hundreds of deals by U.S. technology giants flew under the radar of merger watchdogs, fueling the companies' unchecked growth in the digital economy, according to a Federal Trade Commission study (PDF). The data on acquisitions by Apple, Amazon, Alphabet's Google, and Microsoft show that antitrust enforcers must be more aggressive in making sure companies aren't taking advantage of "loopholes" to avoid reporting deals to regulators, FTC Chair Lina Khan said Wednesday. "This study highlights the systemic nature of their acquisition strategy," Khan said about the tech companies during an FTC public meeting. "Digital markets in particular reveal how smaller transactions invite vigilance." The findings could bolster arguments that competition cops need to step up scrutiny of acquisitions by tech platforms to curb their power.
The data comes from a study the FTC announced last year to examine deals between 2010 and 2019 by the five tech giants to better understand whether acquisitions occurring outside the view of antitrust enforcers could be undermining competition. The FTC issued orders to the five companies requiring them to provide information about past acquisitions that weren't reported to antitrust agencies. The companies identified 819 such transactions, including acquisitions of voting control of companies, partial investments, patent acquisitions, and what the FTC called "hiring events" in which a group of employees were hired from another company. Although the FTC didn't identify specific transactions by companies, one example is Facebook's acquisition last year of image library Giphy for about $400 million. Bloomberg News reported last month that before the takeover, Giphy paid a dividend to investors. While perfectly legal, the payment lowered the value of Giphy's assets so that antitrust officials didn't have to be notified of the deal under the reporting thresholds at the time.
The data comes from a study the FTC announced last year to examine deals between 2010 and 2019 by the five tech giants to better understand whether acquisitions occurring outside the view of antitrust enforcers could be undermining competition. The FTC issued orders to the five companies requiring them to provide information about past acquisitions that weren't reported to antitrust agencies. The companies identified 819 such transactions, including acquisitions of voting control of companies, partial investments, patent acquisitions, and what the FTC called "hiring events" in which a group of employees were hired from another company. Although the FTC didn't identify specific transactions by companies, one example is Facebook's acquisition last year of image library Giphy for about $400 million. Bloomberg News reported last month that before the takeover, Giphy paid a dividend to investors. While perfectly legal, the payment lowered the value of Giphy's assets so that antitrust officials didn't have to be notified of the deal under the reporting thresholds at the time.
Yeah right (Score:4, Insightful)
Re: Yeah right (Score:1)
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Remember "Never attribute to malice that which is adequately explained by stupidity".
Although bought and stupid is probably the best option.
"Loopholes" ... (Score:5, Insightful)
Exactly (Score:5, Insightful)
The operative words are:
While perfectly legal, ...
If legislators wanted something different, then they would have enacted different legislation. They didn't. If they don't like the results, then they can do their jobs and enact different legislation. But they, and their surrogates the administrative bodies that implement legislation, don't get to whine until they do so.
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The operative words are:
While perfectly legal, ...
If legislators wanted something different, then they would have enacted different legislation. They didn't. If they don't like the results, then they can do their jobs and enact different legislation. But they, and their surrogates the administrative bodies that implement legislation, don't get to whine until they do so.
Everyone here understands that software has bugs, functionality that while written into the code is clearly not the intent of the programmer.
Why can the same understanding not apply to laws?
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Why can the same understanding not apply... ?
Because neckbeards are actually a type of alien infestation that roots into the nervous system and takes over as the dominant consciousness controlling the organism.
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Much like software, laws can be updated when found not to work as intended. The context here is that if no one is trying to change them, the laws are working as intended.
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Much like software, laws can be updated when found not to work as intended. The context here is that if no one is trying to change them, the laws are working as intended.
Well you can't fix a bug without a bug report, which frankly, I think we're getting now.
There's also a question whether they were actually following the law. The "while perfectly legal" quote came from Bloomberg, not the FTC, what the FTC said is that more scrutiny is required.
I think we both understand that if Company A pays out a $100 million dividend to investors, then sells itself to Company B for $400 million, then Company B was effectively valuing Company A at $500 million. That's an understanding the
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A lot of software also has Easter Eggs. Functionality intentionally written into the program that flies under the radar until it's already published. Sometimes people even write specific bugs to make their software compatible only with certain other software.
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No, you're misrepresenting the facts of the situations and pulling words out of context. The "loophole" mentioned isn't a gap in the law, as was suggested, but is rather a gap in oversight that's allegedly allowing criminals to get away with illegal behavior.
More specifically, these companies are being investigated for breaking existing antitrust law (i.e. no need to enact new legislation; current law covers it already), and it's been suggested that they were able to get away with it for as long as they h
Re:"Loopholes" ... (Score:4, Insightful)
you mean 'following the law their finance people wrote for their benefit.'
Re: "Loopholes" ... (Score:3)
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This is akin to "technically" correct being the best kind of correct.
As others have pointed out, unless this kind of hand-wave is applied even somewhat equally, it amounts to to a two tiered legal system, where those who can afford a ream of CPAs to scrutinize what may trigger regulators' interests vs. someone without those resources going in with little more than good faith.
Or in other words, following the letter of the law instead of the spirit of the law. And it has been corrupting governance since forev
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... also known as *following the law*.
Not when the "loophole" being discussed is a gap in oversight, as is the case here. Taking advantage of a "loophole" in oversight to speed through a school zone because you know a cop isn't going to be there is not following the law.
Likewise here. The FTC told companies it wouldn't automatically investigate acquisitions below a certain threshold for anticompetitive activity, but that doesn't mean those acquisitions are automatically not anticompetitive in nature. It just meant they wouldn't be investigated
Okay... (Score:3)
Re: Okay... (Score:3)
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Structuring (Score:3)
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And yet, in almost every other law, you're free to intentionally avoid a limit and the government says you did the right thing.
It's only this specific banking law that says you can't structure deposits to avoid having transactions reported. And having the transactions reported is not even a problem unless you're cheating on your taxes...
That's the thing you whine about? Sounds like you need a good audit!
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And yet, in almost every other law, you're free to intentionally avoid a limit and the government says you did the right thing.
It's only this specific banking law that says you can't structure deposits to avoid having transactions reported. And having the transactions reported is not even a problem unless you're cheating on your taxes...
That's the thing you whine about? Sounds like you need a good audit!
The critical difference is that in structuring deposits and this FB/Giphy transaction they're not actually avoiding them limit, they're exceeding the limit but trying to do so in a way that isn't detected.
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In the case of structuring bank deposits, you're obviously avoiding reporting; if they investigate and find matching cash payments to your business, there is no crime. It's only when you sit on part of the money to avoid the reporting that you get charged with a crime.
Here, there is only regulatory scrutiny when the asset value is above a certain amount. Transactions to pay investors a dividend are a perfectly legal way to reduce the asset value. There is no prohibition on doing this. It isn't a "loophole."
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Scenario A: FB acquires Giphy without the dividend. Giphy shareholders make $X / share and FB owns all of Giphy.
Scenario B: FB acquires Giphy with the dividend. Giphy shareholders make $A / share from the dividend and $B / share from the sale and A+B=X. Giphy shareholders make $X / share and FB owns all of Giphy.
The result is exactly the same.
Consider it another way, GM & Toyota want to merge, so GM (current share price ~$51) takes a giant loan, pays a $51 dividend to shareholders, then sells to Toyota
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My issue here is that the companies ARE exceeding the limit but are deliberately structuring it to make it SEEM like they aren't....AKA "structuring".
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Sarcasm is for idiots, so it wouldn't surprise me if you thought it was a shield that lets you troll without people presuming that you support the implications of your statement.
You have nothing to say, but you're saying it anyway, and your idiocy is on your sleeve. None of that turns on a /moron tag.
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That you misunderstood the intent of my original statement does reflect a failure to adequately communicate said intent, and I'll own that.
Perhaps I should find it reassuring that our clothes match, but maybe we could both do with updated wardrobes.
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You're a moron if you think I misunderstood your intent.
What is with you low-IQ guys who claim to be nerds?
No, people who think you're a moron and ignore your "joke" and instead pan you for what you fucking implied your position is with your attempt at humor does not, in any fucking way, imply that I misunderstood anything.
You can't imagine, you just can't imagine, that you're a moron. Even when you want to disagree, you don't realize that pretending I didn't understand makes it about you being a moron.
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Regardless of your intent, thanks!
Be careful what you wish for (Score:2)
These two should be taught in "lawmaking 101":
1) If you tax something, people will do anything to avoid that something
2) If you give incentive X, people will move heaven and earth to get X
Cases in points: ... made in the USA, and just moved their business overseas. The yacht is a seafaring vessel after all. And the industry sank, never to come back: https://www.washingtonpost.com... [washingtonpost.com]
1) When luxury yacht sales were taxes to "soak the rich", they stopped buying those yachts,
2) When the Turkish government incen