Divestiture: Doctrinal Development and Modern Application

Abstract

In the last several years, policymakers have increasingly pursued legislative reforms that would expand antitrust enforcement while advocating more generally for the break-up of tech companies with leading digital platforms. At least a half-dozen antitrust reforms were introduced in Congress in 2021, while federal enforcers in the Department of Justice and Federal Trade Commission have taken an aggressive approach to enforcement under the Biden administration. These recent events have invited an assessment of the scope and limitations of divestiture, as policymakers and regulators consider the remedy’s viability under existing and prospective federal antitrust laws. To that end, this paper aims to provide a comprehensive account of the development of the doctrinal principles and application of divestiture, beginning with its origins as an equitable remedy and subsequent developments in response to legislative reforms. The paper then discusses divestiture’s primary use in the current regulatory landscape to redress violations under § 7 of the Clayton Act, followed by an examination of its historically limited application as a remedy to unilateral conduct. In its final substantive section, the paper then assesses the ongoing debate as to divestiture’s applicability to acquisitions of nascent competitors. Finally, the conclusion provides a summary of divestiture’s doctrinal principles and application, and the implications for how divestiture may be applied in the future.