The breakup is something that has been normalized in our conversations about large companies. One may be forgiven for thinking that a breakup is a relatively simple and common remedy. However, the non-merger breakup is actually something we have little experience with. There are only three instances of a breakup being used in non-merger cases, with the last being the breakup of AT&T in 1982.
Breaking up a company is very difficult to do and the results could make everyone – not just the company – worse off. It’s a little like brinkmanship in global politics: the strategic threat of an extreme policy can sometimes get a country what they want but the plan is to always back away from the policy without executing. In antitrust, the threat of breakup could encourage good behavior from companies that have grown large. But actually executing a breakup could undermine efficiencies, stifle innovation, and harm stakeholders.
Breaking up a company for Section 2 violations, which are monopolization claims under the Sherman Act, is a dramatically different remedy than when applied to merger cases. Mergers create one company from two or more distinct companies, so it is far easier to see the lines where breakup should occur. But even the lines in merger cases are only clear for a limited time. This is why antitrust enforcement agencies fight so hard for injunctions to stay mergers pending judicial review. It can become very difficult to “unscramble the egg” of a consummated merger once the companies have consolidated operations. In a non-merger case, there are rarely clear lines between business units that allow an enforcer to break off a fully functioning company from the larger whole.