1. Competition law under financial capitalism
- Author
-
McLean, Andrew William Peacock
- Abstract
The American economy is dominated by finance. Institutional investors and asset managers control ever-greater amounts of capital. Non-financial firms almost uniformly abide by the corporate governance principle of shareholder value maximisation. In short, following a process of financialisation that started around 1980, the United States has entered an era of financial capitalism. Focusing on this jurisdiction, the thesis considers the implications of financialisation for competition law. Centrally, the thesis advances the concept of finance-led consolidation, a term that describes how financial institutions and finance-led corporate managers drive the anticompetitive accumulation of economic power in markets for goods and services. The thesis traces the origins of finance-led consolidation to the turn of the twentieth century, when investment banks spurred a merger wave that led to almost every industry in the United States coming under the control of a monopolist. An antagonism existed between competition law and financial institutions at this time, with the former attempting to disperse concentrations of capital brought about by the latter. Yet, as this early iteration of finance-led consolidation fell away, the connection between competition law and finance was lost. Modern competition law sees no meaningful relationship between the nature of the financial economy and competition in the non-financial economy. The thesis stresses that finance-led consolidation has returned alongside financialisation and highlights two specific examples of this phenomenon: common ownership and start-up acquisitions. Both are among the most pressing issues in competition law, and each is innately tied to the dynamics of financial capitalism. Given the reappearance of finance-led consolidation, which diminishes competition in the service of corporate and financial interests, the thesis argues that competition law should regain its hostility towards this phenomenon. In this vein, the thesis offers various proposals for how to combat finance-led consolidation in the context of common ownership and start-up acquisitions.
- Published
- 2023