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:
- Mergers that significantly increase market concentration
- Acquisitions of competitors or nascent competitors by a dominant firm (defined a 50% market share or possession of significant market power)
- 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.