Is Berkshire Hathaway a trust?

[pscot]

We don't have trust busters any more, do we? Do we still have anti-trust laws?

[elleng]

1. We have anti-trust laws.

Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. Wikipedia

[LiberalAndProud]

2. I don't know. Ask Comcast.

[The Velveteen Ocelot]

3. No, it's a conglomerate holding company.

We do have antitrust laws, which are sometimes not enforced as well as they should be (although a bit better now than under the Bush Admin), but Berkshire-Hathaway is legal under the antitrust laws because its holdings are diversified. For example, it owns Burlington Northern-Santa Fe Railroad. If it also attempted to buy Union Pacific Railroad, there would be a significant antitrust issue because that would significantly reduce competition in the railroad industry. However, none of the companies BK has purchased are (or were) competitors of each other, so they haven't broken the antitrust laws. Whether this sort of conglomerate should be permitted is another question, but as of now, it is permitted.

[elleng]

4. Thanks for the explanation, Ocelot,

and in light of your railroad example, when Warren Buffett learned that one of his holdings controlled a small railroad he spun it off, so that he could maintain his BN/SF holding.

[pscot]

5. But suppose BNSF,

which controls all rail shipments across the northern tier, decides it would rather carry crude oil, in which it has a stake, than fruit or other food stuffs, in which it has no interest.

[The Velveteen Ocelot]

6. BNSF doesn't have a stake in oil, but BRK holds stock in Exxon

and in a Canadian company, Suncor. However, Buffett also hedged his bets on oil transportation by rail by purchasing a major stake in Phillips Specialty Products, a pipeline company. The fact that BRK has a stake in oil companies doesn't make BNSF's decision to transport more oil than agricultural products an antitrust violation because it doesn't interfere with competition in any particular industry. I would think, though, that it would be in BNSF's best interests to add enough capacity to transport both products, or it will lose the market for agricultural products to Union Pacific and various trucking companies.