Senator Amy Klobuchar (D-MN), the new chair of the Senate Judiciary Committee’s Antitrust Subcommittee, unveiled comprehensive antitrust reform legislation on Thursday.
U.S. Senator Emphasizes The Importance Of Antitrust Lawsuits And Reform
Klobuchar proposes, among other things, changing mergers and acquisitions (M&A) laws to prevent dominant firms from engaging in “exclusionary conduct,” shifting the burden of proof to the business community in certain circumstances to demonstrate that acquisitions or conduct do not harm competition, and authorizing a significant increase in federal antitrust enforcement funding.
Her bill is unmatched in scope, breadth, and boldness. And some of her proposals might get bipartisan backing.
The measure is based on the idea that antitrust enforcement has been ill-equipped to deal with the difficulties of the twenty-first-century economy due to 40 years of Chicago School conservative dogma.
More consolidated markets, unregulated Pac-Man acquisitions by big corporations in tech and other industries, more sellers with monopoly power, more purchasers with monopsony power, and an excessively cautious jurisprudence that defies the plain meaning of current antitrust rules, according to Klobuchar and others.
Klobuchar suggests a mix of legislation amendments and burden transfers to solve these issues. She wants to re-energize antitrust enforcement and instruct judges to be more open to antitrust lawsuits than they have been in the past.
Her idea for mergers includes two main components. To begin, she would change Section 7 of the Clayton Act to ban mergers that “present an appreciable danger of significantly lowering competition,” rather than the existing language, which only bars mergers that “substantially diminish competition.
” She convincingly argues—as I have previously stated—that the courts misread the present Clayton Act wording to require a near certainty of future injury before enjoining a transaction. Her law also prevents mergers that might lead to buyer monopoly power.
Second, her bill shifts the burden of proof from the government to companies proposing mergers in cases where market concentration would increase significantly; where a large firm wants to gobble up smaller, would-be competitors; where the acquired firm is a disruptive (e.g., price-cutting) competitor; where the deal is worth at least $5 billion; or where the buyer is worth at least $100 billion (this is my Pac-Man point).
This isn’t an absolute prohibition on certain mergers and acquisitions; rather, it’s a demand that corporations show that the transaction’s advantages to consumers and competition outweigh any dangers.
The measure proposes similar changes to the legislation that governs some dominating company actions. It changes Section 2 of the Clayton Act to ban “exclusionary conduct,” which is defined as behavior that “materially disadvantages competitors or hinders their ability to compete” and has a “significant danger of hurting competition.”
She suggests a rebuttable presumption that exclusionary conduct represents an “appreciable risk of damaging competition” for enterprises with significant market shares or other signs of market strength.
The bill proposes significant funding increases for the Department of Justice’s Antitrust Division and the Federal Trade Commission to compensate for a “decade of flat budgets” in the face of a growing economy, increased M&A activity, and growing concern about market concentration and single-firm dominance.
Finally, the senator’s measure addresses other critical problems like civil fines for violations, more emphasis on market analysis and merger results, and extended whistleblower protections for individuals who expose civil infractions.
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