At Least 80% of the Time, Big Actually Is Bad

Our dataset documents major antitrust investigations into U.S. corporations valued at more than $100 billion. Of those 76 corporations, more than 80 percent have faced antitrust scrutiny at some point in the last thirty years, including monopolization claims, merger challenges, price fixing suits, and no-poach suits. This data, which is composed almost entirely of government investigations and complaints, shows that when firms are too big, they tend to abuse their dominance through illegal business practices. 

One way to stop the problem of corporate bigness from getting worse is to bar firms above certain size thresholds from engaging in mergers. Currently, stopping a merger requires costly antitrust litigation, significant prosecutorial discretion, and unwieldy ‘rule of reason’ analysis by judges unequipped to handle market analysis. This data provides support for a Congressional ban on mergers above a certain size. 

Similarly, this data also provides support for codifying an abuse of dominance standard that presumes certain business practices are illegal when undertaken by dominant firms. Currently, antitrust law often requires proving that abusive business practices resulted in “anticompetitive effects,” with analysis focusing on a narrow set of harms, and using a ‘rule of reason’ framework that significantly favors defendants. Legislative reform that holds certain business practices by dominant firms to be an illegal “abuse of dominance” would help protect against predatory conduct.

What appropriate size thresholds should be is open to debate, but at the very least, it’s time for Congress to write clear bright-line merger control and abuse of dominance rules to provide clarity to businesses and market participants.