When the government breaks up a huge company into several smaller parts, is the parent reimbursed in any way due to the lost revenue, or is that just the nature of the beast?
They break up monoplies to stop them from making obscence levels of profit. A payout to the parent comapny would defeat this purpose.
Often there no longer is a “parent” company after the breakup…just the spinoffs. There’d be no parent remaining to make such a payment to.
The original company is just a legal fiction. (All corporations are). The real owners of the business are the shareholders, and they get shares in the new companies in exchange for their old shares in the huge monopoly.
No, they break up monopolies because they have abused their monopoly power to create an inefficient market. Merely being a monopoly and being profitable is not a crime – just ask anybody who owns a patent.
Let’s look at the two most famous cases in US Anti-trust history: Standard Oil and the old AT&T:
Standard Oil was completely dismantled and split into eight large oil companies, and was also divested of a number of subsidiaries. Standard Oil itself ceased to exist, and all the shares were converted, proportionally, into shares of the eight new companies.
In the case of AT&T, the company spun off its local phone service into seven new local phone companies (the “baby bells”). Unlike Standard Oil, AT&T wasn’t completely divested, and was allowed to continue to provide long-distance service, since they didn’t have a monopoly in that market (other long-distance competitors had sprung up in the 1970s). In this case, a portion of the shareholders’ equity was converted to the baby bell stocks, and the rest remained AT&T.
After the Telecommunications Act of 1996 deregulated the local phone market, the AT&T judgment became largely moot, and the baby bells started all sorts of mergers with one another, until SBC finally bought out AT&T a year ago.
Stephen Colbert does a great job explaining the AT&T thing on YouTube: