Klobuchar Pitches Antitrust Reform for ‘Too Big to Fix’ Mergers
Date: 2021-02-04 15:17:03
Senator Amy Klobuchar is proposing a sweeping reform to U.S. antitrust laws that would curtail the power of dominant companies across the economy by making it harder for them to buy competitors and flex their muscles over markets.
Klobuchar, who is the incoming chairwoman of the Senate’s panel on antitrust law and competition, plans to introduce legislation that would change current merger law to make it easier to stop deals in court and target conduct by dominant companies that thwarts competition from rivals.
“Our laws and our enforcers both need to be as sophisticated as today’s corporate titans,” the Minnesota Democrat said in an interview. “We often talk about firms being too big to fail. A question for modern antitrust enforcement is whether some mergers are too big to fix.”
Klobuchar’s past antitrust efforts failed to advance in the Republican-controlled Senate, but now Democrats are looking to capitalize on their party’s control of Congress and the White House to put more teeth into competition laws. Progressives have come to see competition policy as a mechanism to combat economic woes like income inequality and stagnant wages that some see as tied to increased concentration across industries.
Democrats will need 60 votes to pass legislation in the Senate, forcing them to secure Republican support for any bill. Yet some Republicans have said they back antitrust reform.
In the House, four Republicans on the House antitrust panel, including Ken Buck of Colorado, have said they support changes to merger law to make it harder for companies to win approval for deals. In many cases, they said, the evidence required to block mergers is “insurmountable.”
Klobuchar, who campaigned for the Democratic presidential nomination last year, said she expects to get Republican support because there are bipartisan concerns about the power of technology companies. Republicans also have supported another element of Klobuchar’s bill — increased funding for the Justice Department’s antitrust division and the Federal Trade Commission.
“You cannot take on the likes of the biggest companies in the world,” she said, “by doing things with Band-Aids and duct tape.”
Many antitrust experts say courts have gone too far in weakening the laws governing mergers and anticompetitive conduct. They also blame officials at the Justice Department and the FTC for not being aggressive enough, particularly against U.S. technology giants.
Monopoly cases were almost unheard of until last year when the government sued Alphabet Inc.’s Google and Facebook Inc.
“The overall result is an approach to antitrust that has significantly diverged from the laws that Congress enacted,” the House antitrust panel said in a report released last year on the dominance of American tech companies.
Klobuchar’s legislation would be the first overhaul of the basic legal standard used to judge deals since the primary U.S. merger law was passed more than a century ago. Court decisions have interpreted the 1914 Clayton Act to prohibit mergers that “substantially” lessen competition.
The bill would amend the law to make it easier to stop deals by forbidding takeovers that “create an appreciable risk of materially lessening competition,” where “materially” would be defined as anything more than a trivial amount.
Her proposal would create additional hurdles by categorizing certain deals as illegal unless the companies can show there is no risk of reduced competition.
That’s a subtle but significant shift because under current law the onus is on antitrust enforcers to convince courts that a deal is illegal. Klobuchar’s bill would place the burden on companies.
Deals presumed to be illegal would be acquisitions of competitors or emerging competitors by a company with a market share of 50% or more; takeovers of “maverick” firms that are shaking up industries; transactions valued at more than $5 billion; and acquisitions of $50 million or more by companies valued at more than $100 billion.
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