McLean, AP;
(2021)
A Financial Capitalism Perspective on Start-Up Acquisitions: Introducing the Economic Goodwill Test.
Journal of Competition Law & Economics
, 17
(1)
pp. 141-167.
10.1093/joclec/nhaa021.
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Abstract
This paper discusses the acquisition of start-ups by major technology firms. Such transactions pose a significant anticompetitive threat, yet often escape competition scrutiny because they fail to trigger merger notification threshold tests. Alongside a financial analysis of historic acquisitions by Google, Apple, Facebook, Amazon and Microsoft, the paper introduces a new threshold test—the economic goodwill test. The economic goodwill test is a concerned with the value of a target’s net tangible assets as a proportion of total transaction value. The difference between these figures largely represents the gains an acquirer expects to realise from a strengthened competitive position, therefore reflecting the logic driving the mass acquisition of technology start-ups. Although a specific triggering figure is not prescribed, the economic goodwill test represents a useful innovation that could bring potentially anticompetitive start-up acquisitions under substantive merger review. More broadly, the paper argues start-up acquisitions are representative of the difficulties that competition law faces governing economic activity in the era of financial capitalism. The modern financial system creates a strong bridge between the present and the distant future. This enables firms to engage in future-oriented competitive strategies that challenge competition law’s static approach.
Type: | Article |
---|---|
Title: | A Financial Capitalism Perspective on Start-Up Acquisitions: Introducing the Economic Goodwill Test |
Open access status: | An open access version is available from UCL Discovery |
DOI: | 10.1093/joclec/nhaa021 |
Publisher version: | https://doi.org/10.1093/joclec/nhaa021 |
Language: | English |
Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
Keywords: | B15 - Historical; Institutional; EvolutionaryB52 - Institutional; EvolutionaryG10 - GeneralG34 - Mergers; Acquisitions; Restructuring; Corporate GovernanceK21 - Antitrust LawL40 - GeneralP16 - Political Economy |
UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of Laws |
URI: | https://discovery.ucl.ac.uk/id/eprint/10141135 |
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