Visa abandoned its plan to acquire fintech Plaid after the US justice department sought to block the deal © AP

“One thing about startups is that you can often acquire them,” Mark Zuckerberg wrote in a 2012 email to a colleague. That telling message was recently disclosed during a Federal Trade Commission antitrust action against Facebook. The agency may seek to have the company Mr Zuckerberg founded unwind its blockbuster acquisitions of Instagram and WhatsApp.

For a while industry titans could snuff out up-and-coming challengers by acquiring them. But Uncle Sam might finally have become wise to that tactic. Visa last week terminated its $4.9bn deal to acquire fintech Plaid. The US Department of Justice sought to block the deal.

Edgewell abandoned last year its $1.4bn buyout of shaving start-up Harry’s after the FTC sought to block that deal. The company behind Schick razors is hardly a tech giant, but the same competition concerns applied.

Consumers are the winners. Competition should benefit. Trust busters and politicians are reluctant to break up over-dominant companies. Blocking takeovers is a lot easier.

The cases regulators have brought so far largely relied on company documents suggesting acquisitions were sought to suffocate a competitor. In the instance of Plaid, the DoJ complaint included a doodle of a partially underwater volcano showing that the debit payment start-up had a series of capabilities that allowed it to take Visa head-on. An executive then said, “I don’t want to be IBM to their [Plaid’s] Microsoft.”

In the case of Edgewell, after the deal was announced, the company’s chief executive said on a public earnings call that the company was not about to embark on lower consumer prices, which he referred to as “value destruction”.

Harry’s and Plaid now have to figure out how to reach long-term profitability on their own. Visa and Edgewell denied their proposed purchases would have had anti-competitive effects. Both decided it was not worth fighting the US government. A taller task now remains: staying ahead of a pack whose nimblest young wolves can no longer be tamed with a takeover.

Article amended after publication to define Plaid as a debit payment service.

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