A study carried out by the FTC over a decade evaluated transactions between small and big enterprises technology (Big Techs). Following the results, Federal Trade Commission President Lina Khan suggested last week that she plans to adopt changes in the way the agency looks at this type of business.

At first, it is worth noting that the economic ecosystem of the technology sector is basically constituted by giant companies who, at some point, buy small startups. Something that is even frequent news here in the Olhar Digital.

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However, the possible warning signal from the antitrust agency could throw a “bucket of cold water” on new mergers and acquisitions.

FTC Findings

In a statement, Khan said the report reinforces that some loopholes may be “unjustifiably allowing” some deals to go unnoticed by the FTC.

The agency's research analyzed 616 transactions (valued at least $1 million) between 2010 and 2019. Transactions that were not reported to antitrust authorities by names such as: Amazon, Apple, Facebook, Google and Microsoft.

The vast majority (94%) exceeded some limits imposed by the agency. Some even managed to qualify for regulatory exemptions.

Meanwhile, 79% used deferred compensation (a contract where part of the compensation is retained for future payment) to close deals and nearly 77% resorted to using non-compete clauses.

Finally, 36% of transactions involved taking on some amount of debt.

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American Economic Liberties Project research director Matt Stoller indicates that the number of non-compete clauses in the businesses evaluated is also a concern. Stoller says it's “a clear anti-competitive intention” of big companies to “just take talent” and keep them from competing with the Big Techs.

On the other hand, the report does not explicitly indicate which rules were broken or that the deals were in fact anti-competitive, notes Neil Chilson, a former FTC adviser. Chilson ends by saying that the president "suspects mergers, no matter the size".

For now, it remains to be seen what will be the next steps of the agency antitrust American on the issue.

Main Image Credits: DCStockPhotography/Shutterstock

Street: Axios

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