Former Democrat Presidential Candidate and current Senator from Minnesota, Amy Klobuchar is the new chair of the antitrust subcommittee in the U.S. Senate. She recently introduced new legislation designed to reign in technology companies and increase competition through antitrust law. The Press Release from her office states:
WASHINGTON – U.S. Senator Amy Klobuchar (D-MN), the lead
Democrat on the Judiciary Subcommittee on Antitrust, Competition Policy and
Consumer Rights, introduced sweeping new legislation today to reinvigorate
America’s antitrust laws and restore competition to American markets. The Competition
and Antitrust Law Enforcement Reform Act will give federal
enforcers the resources they need to do their jobs, strengthen prohibitions on
anticompetitive conduct and mergers, and make additional reforms to improve
enforcement.
“Competition and effective antitrust enforcement are
critical to protecting workers and consumers, spurring innovation, and
promoting economic equity. While the United States once had some of the most
effective antitrust laws in the world, our economy today faces a massive
competition problem. We can no longer sweep this issue under the rug and hope
our existing laws are adequate,” said Senator Klobuchar. “The Competition
and Antitrust Law Enforcement Reform Act is the first step to
overhauling and modernizing our laws so we can effectively promote competition
and protect American consumers.”
This bill is cosponsored by Judiciary Subcommittee on
Antitrust and Commerce Committee members Richard Blumenthal (D-CT), Cory Booker
(D-NJ), Ed Markey (D-MA), and Brian Schatz (D-HI).
Many industries are consolidating as large mergers and
acquisitions increase and big companies buy out upstart rivals before they can
become a competitive threat. Harmful exclusionary practices by dominant
companies – such as refusals to deal with rivals, restrictive contracting, and
predatory pricing – squelch competition. U.S. antitrust law enforcement against
powerful firms has lagged efforts in other developed countries, particularly
when it comes to enforcement against the dominant digital platforms and other
large corporations. To remedy these longstanding issues, the Competition
and Antitrust Law Enforcement Reform Act will:
1. Increase Enforcement Resources
For years, enforcement budgets at the Justice Department’s
Antitrust Division and Federal Trade Commission have failed to keep pace with
the growth of the economy, the steady increase in merger filings, and
increasing demands on the agency's resources. To enable the agencies to fulfill
their missions and protect competition by bringing enforcement actions against
the richest, most sophisticated companies in the world, this bill would
authorize increases to each agency’s annual budget.
2. Strengthen Prohibitions Against Anticompetitive
Mergers
The bill would restore the original intent of Section 7 of
the Clayton Act, which was designed to stop anticompetitive mergers in order to
address competitive problems in their “incipiency” before they ripened and
caused harm. As the law stands today due to court decisions, enforcers can
block only the most egregious acquisitions, which has allowed many harmful
mergers to escape scrutiny. To remedy this, the Competition and
Antitrust Law Enforcement Reform Act will:
- Update the legal standard for permissible mergers. The
bill amends the Clayton Act to forbid mergers that “create an appreciable
risk of materially lessening competition” rather than mergers that
“substantially lessen competition,” where “materially” is defined as “more
than a de minimus amount.” By adding a risk-based standard and clarifying
the amount of likely harm the government must prove, enforcers can more
effectively stop anticompetitive mergers that currently slip through the
cracks. The bill also clarifies that mergers that create a monopsony (the
power to unfairly lower the prices a company it pays or wages it offers
because of lack of competition among buyers or employers) violate the
statute.
- Shift the burden to the merging parties to prove
their merger will not violate the law. Certain categories of
mergers pose significant risks to competition, but are still difficult and
costly for the government to challenge in court. For those types of
mergers, the bill shifts the legal burden from the government to the
merging companies, which would have to prove that their mergers do not
create an appreciable risk of materially lessening competition or tend to
create a monopoly or monopsony. These categories include:
1.
Mergers that significantly increase market
concentration
2.
Acquisitions of competitors or nascent
competitors by a dominant firm (defined a 50% market share or possession of
significant market power)
3.
Mega-mergers valued at more than $5 billion
3. Prevent Harmful Dominant Firm Conduct
Decades of flawed court decisions have weakened the
effectiveness of Section 2 of the Sherman Antitrust Act to prevent
anticompetitive conduct by dominant companies. The bill creates a new provision
under the Clayton Act to prohibit “exclusionary conduct” (conduct that
materially disadvantages competitors or limits their opportunity to compete)
that presents an “appreciable risk of harming competition.”
4. The legislation would establish a new, independent
FTC division to conduct market studies and merger retrospectives.
5. Implement Additional Reforms to Enhance Antitrust
Enforcement
The Competition and Antitrust Law Enforcement Reform
Act will also implement a series of reforms to seek civil fines for
antitrust violations, study the effect of past mergers, strengthen
whistleblower protections, and more.
“This bill will turbocharge antitrust enforcement,” said
Charlotte Slaiman, Competition Policy Director at Public Knowledge. “Much-needed
updates to the Clayton Act’s merger review and exclusionary conduct provisions,
along with a new office at the Federal Trade Commission and more funds for
antitrust enforcers, will help level the playing field for enforcers to better
protect consumers from anticompetitive abuses. I’m looking forward to
continuing to work with Senator Klobuchar on this and other competition policy
proposals.”
"Consumer Reports appreciates Senator Klobuchar's steady
leadership in working to strengthen our antitrust laws to equip them to protect
a competitive marketplace and the benefits that consumers, small businesses,
and workers receive from it. This legislation gives our antitrust laws an
important re-set. It ensures that harmful merger trends and exclusionary
conduct can be stopped before it is too late and the harm is locked in. It
extends the reach of the law so that blocking others from a fair chance to
compete is a violation, even before a monopoly results. And it gives our
government the enforcement authority and resources needed for effective
deterrence. We look forward to working with Senator Klobuchar and others to
revive our antitrust laws for the marketplace of the 21st century,” said
George Slover, Senior Policy Counsel, Consumer Reports.
“Senator Klobuchar’s bill puts us on a path toward tractable,
actionable, achievable antitrust reform that will free consumers, workers, and
businesses from the crushing economic impact of anticompetitive mergers and
monopolies. This is exactly the kind of leadership we need at the moment we
need it most,” said Diana L. Moss, President, American Antitrust
Institute.
This legislation is endorsed by Professor Jonathan Baker of
American University Washington College of Law, Professor Martin Gaynor of
Carnegie Mellon University, Professor Nancy Rose of Massachusetts Institute of
Technology, Professor Steven Salop of Georgetown University Law Center,
Professor Fiona Scott Morton of the Yale University School of Management, and
Professor Carl Shapiro of the University of California at Berkeley.
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