In 2018 Bayer and Monsanto had a huge merger. In the future it is possible that it will be in the US's interest to reverse their decision due to the sudden shift in market pressure. That said Bayer is a German company so I wanted to know if the US Supreme Court or any other court could hit Bayer with antitrust regulations. If not is there anyway the US can regulate Bayer?
Can the US break-up a foreign company (specifically Bayer) after it has merged with an American one due to an increase in market power?
Starting at the top, a company can be restructured ("broken up") under anti-trust laws (classical examples: Standard Oil, ATT), however restructuring is not common. Approval of a merger does not immunize a company against future anti-trust action – the company has to continuously obey the law.
Foreign companies are not free of the threat of anti-trust actions, indeed the "exception" where anti-competitive behavior is allowed is when it only hurts foreign markets. See In Re Capacitors Antitrust Litigation:
Congress’s goal was to assure American companies that they would not be liable under the Sherman Act for conduct that typically would be considered anticompetitive so long as that conduct adversely affected foreign markets only
This is implemented in 15 USC 6a which says that
Sections 1 to 7 of this title shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless...
and sections 1-7 are the general prohibitions against anti-competitive behavior 15 USC 8 specifically addresses illegal import trade:
Every combination, conspiracy, trust, agreement, or contract is declared to be contrary to public policy, illegal, and void when the same is made by or between two or more persons or corporations, either of whom, as agent or principal, is engaged in importing any article from any foreign country into the United States, and when such combination, conspiracy, trust, agreement, or contract is intended to operate in restraint of lawful trade, or free competition in lawful trade or commerce, or to increase the market price in any part of the United States of any article or articles imported or intended to be imported into the United States, or of any manufacture into which such imported article enters or is intended to enter.
So given that Bayer does business with the US, it is subject to US antitrust law. It can be found to be in violation, and can be punished accordingly.
The Dept. of Justice has this long analysis of the law of anti-trust actions against foreign companies. But unquestionable and as upheld in a number of cases against foreign businesses e.g. F. Hoffman-La Roche Ltd. v. Empagran S. A., 542 U.S. 155 commercial activities abroad are subject to the Sherman Antitrust Act if
those activities adversely affect domestic commerce, imports to the United States, or exporting activities of one engaged in such activities within the United States
It is hard to know whether the court would order Bayer to be broken up, since involuntary restructuring is an uncommon outcome.
With exterritorial enforcement of domestic laws, it is important to watch how things are described.
- The US government cannot force a German company to break up.
- The US government can limit/prohibit the operations of the US subsidiary of a German company, or the trade of a German company with and in the US, if that company does not comply with US decisions how it should structure itself.
Potentially this goes as far as de-listing from stock exchanges, seizure of funds, etc.
The US is in a much stronger position in this regard than Mali, to pick a random example. Being forced to cease US operations would make most big EU companies rethink their structure, while being forced to cease Mali operations would not. Also, some states have signed investment protection agreements which might allow a company to demand damages for such an action.