The Competition and Antitrust Law Reform Act would change the burden on companies proposing mega mergers to prove that their business would not pose a risk to competition.
American companies have been involved in more than $ 10 trillion in mergers and acquisitions since 2008, and Senator Amy Klobuchar (D-MN) on Thursday announced a bill that aims to ensure that these deals do not harm consumers or interrupt competition.
It is not uncommon, especially in the technology industry, for a major player to acquire a popular pair. (See: Facebook buying Instagram, Twitter buying Vine, Uber buying Postmates.) Klobuchar wants to make sure that when “an independent company that plays a disruptive role in the market” is observed by an established company, it does not pose a threat to competition.
“Although the United States already has some of the most effective antitrust laws in the world, our economy today faces a huge competition problem,” said Klobuchar in a statement. “We can no longer sweep this problem under the rug and hope that our existing laws are adequate.”
The intent of the bill, dubbed the Competition and Antitrust Law Reform Act, is: “Reform antitrust laws to better protect competition in the American economy, change the Clayton Act to modify the standard for an illegal acquisition, to prevent competition exclusionary conduct that harms competition and consumers, to increase the ability of the Department of Justice and the Federal Trade Commission to enforce antitrust laws and for other purposes. “
The project, which was co-sponsored by Sens. Richard Blumenthal (D-CT), Cory Booker (D-NJ), Edward Markey (D-MA) and Brian Schatz (D-HI), makes it clear that the government should not only be wary of monopolies, but also of monopsony. While a monopoly involves a company that sells a good or service, a monopsony involves one that buys a good or service. Both evoke concerns about predatory pricing (too high if there is only one seller and very low if there is only one buyer), stagnant wages and high barriers to entry for start-ups. (Read the full invoice below.)
While competition and vertical integration have been a recurring concern in the constantly consolidating entertainment industry – the best known example in recent memory was AT&T’s victory in a trial after DOJ contested Time Warner’s $ 85 billion purchase – so far, monopsonians have been “. That caused quite a stir in Hollywood. With the insatiable appetite for streaming content, this could become a problem if, say, Amazon buys Netflix.
The bill amends the Clayton Act to reduce the limit on prohibiting mergers that “substantially reduce competition” for those that merely “create an appreciable risk of significantly reducing competition”. In some situations – such as mergers valued at more than $ 5 billion or those that would give a company more than 50 percent market share – it shifts government responsibility to prove that there is a risk of harm to the company that needs to prove this is none.
It also establishes the Competition Attorney’s Office within the FTC and proposes civil penalties for antitrust violations of up to 15 percent of the company’s revenue in the United States or 30 percent of the revenue of those “affected or targeted” by illegal conduct.
To enforce the changes, the DOJ’s Antitrust Division would receive $ 484.5 million and the FTC would receive $ 651 million.