It no longer requires explanation as to why New York State has sent taxpayers fleeing to the exits. The pandemic has worsened already dim population trends, as New York, particularly the New York City metropolitan area, has seen an acceleration of people moving to other states.
The highest combined income tax rate in the nation, indecipherable regulations, corrupt dealing, and more, have contributed to an affordability crisis. Yet, the state legislature, now controlled by a Democrat supermajority, keeps digging.
New York was the only state to increase income taxes during the pandemic. The state legislature continues to propose a government takeover of the healthcare system that would cost $300 billion per year. And yet again, the legislature is advancing the “Twenty-First Century Anti-trust Act,” or S6748. Last week, the bill passed the New York State Senate and was referred to the New York State Assembly Economic Development Committee.
This year’s version of the phony anti-trust bill comes with even more power for state government, more reporting requirements, and more fines.
The bill declares the state needs expanded anti-trust powers, and that the current definition of anti-trust is too limited. The legislation criticizes pesky courts for limiting the power of the government, and trial lawyers, to go after companies. The bill expands the definition of monopolies, and even says that the state should be able to go beyond penalizing “monopolies” (under the new broad definition) to punish “anti-competitive” conduct in general.
The penalties for violating the bill have been jacked up in the latest version, to a $1 million maximum fine for an individual and a felony criminal conviction, and a whopping $100 million for a corporation. The state would also demand various reports and documents required by the Federal Trade Commission and Justice Department for certain acquisitions.
Under the proposed “dominance” rule, a company is presumed dominant if they have 40% of the market as a seller, or 30% as a buyer – so their competitors would control most of the market, yet that company would be considered “dominant.”
Under U.S. law a company is considered a monopoly if they have controlled two-thirds of a market for an extended period of time, and that position is unlikely to change. Its conduct is not considered anticompetitive unless it can be shown to harm consumers.
Any company that “abuses” that dominant position would be in violation of the law. Among the indirect evidence that can be submitted is a degrading of the quality of a product without impact on profits. So the State of New York will be judging product quality and if a company with 40% market share didn’t see meaningful change in revenues they may be fined up to $100 million? The absurd potential scenarios are many, and the incentives are tilted toward regulators to find a problem so they can extort money for revenue-hungry state government.
Evidence is not limited to the factors outlined in the bill, so actions could be brought based on actions not covered in the bill. This leaves the definition of “dominance” unclear. It could have state courts looking to European courts for guidance on how to implement the standard – dragging down domestic economic growth to the weak growth of Europe.
On top of crushing job creators with fines and prison, the legislation would invite a feeding frenzy for trial lawyers.
There would be a significantly broader range of offenses as compared to existing state and federal law, making New York courts a haven for contingency-fee-driven antitrust litigation. In other words, individual citizens would be incentivized to bring class-action lawsuits against companies who allegedly abused their “dominant” position.
New York State is home to 10% of the Fortune 500. This legislation would make their success illegal. The 21st Century Anti-Trust Act is a disaster for the state if businesses leave to avoid the unprecedented government overreach. It is a disaster for the country if businesses stay and have to bend over backwards and pay huge fines as they struggle to comply with the new law – these rules and costs would be borne by all Americans. Once again, this legislation must be defeated for the good of New York and the nation.