Senator Amy Klobuchar (D-Minn.) has introduced “The Competition and Antitrust Law Enforcement Reform Act,” sweeping legislation that rewrites U.S. antitrust law and overturns decades of enforcement precedent. This legislation is cosponsored by Sens. Cory Booker (D-N.J.), Richard Blumenthal (D-Conn.), and Ed Markey (D-Mass.).
If implemented, Klobuchar’s bill would give faceless bureaucrats the ability to use antitrust law to reshape the entire U.S. economy. ATR urges all members of Congress to reject this harmful legislation.
Klobuchar’s legislation would make it significantly more difficult for certain American companies to merge with other companies or acquire smaller competitors. Under current law, antitrust enforcers are responsible for proving that a merger or acquisition would harm competition in a court of law.
This legislation would flip this burden of proof on its head by requiring that companies involved in certain mergers or acquisitions prove that their transaction would not hurt competition. This would broadly stack the deck against companies engaging in mergers and acquisitions and make it vastly easier for antitrust regulators to win in court.
Shifting the burden of proof from prosecutors to companies would create a chilling effect on American innovation and entrepreneurship, harming American consumers through higher prices and reduced access to goods and services. Mergers and acquisitions streamline market inefficiencies which benefits the American consumer through lower prices and expanded access to goods and services.
The new standard of proof would apply to companies that control a market share greater than 50 percent, so-called “mega-mergers” of greater than $5 billion, or any deals over $50 million by companies with more than $100 billion in annual revenue or market capitalization. This would impact a large number of American companies over a variety of different industries.
Klobuchar’s bill would eliminate the current requirement that prosecutors have to define a relevant market when bringing an antitrust enforcement action against companies. At the same time, companies would not be allowed to rebut the state’s market definition and provide their own. Governments are notoriously bad at defining relevant markets, whereas market participants are much more equipped to identify their competition.
For example, Johnson and Johnson is the ninth largest American company with a market cap of $424.39 billion. Suppose they wanted to acquire a small business that produced natural, organic soaps. In this example, how would the government define soap? Do they define it based on the ingredients or target audience? Would they define detergent for washing machines and dishwashers as soap? Would they distinguish between bar soap, bath gel, and body wash that doubles as shampoo?
Obviously, Johnson and Johnson would have a better idea of the relevant market for soap than the government. If we allowed the government to be the sole arbiter of what a relevant market for products is, it is likely that key data points would be ignored. Then government actors could game the legal system to reward favored companies and punish disfavored companies. This flies in the face of decades of antitrust enforcement precedent, which puts the consumer’s welfare first, not protecting individual competitors in a marketplace.
Instead of focusing on harm to consumers and protecting the competitive process, Klobuchar would reorient antitrust law to make the size of any company the enemy. Big companies, no matter how much they benefit consumers or compete fairly with rival firms, would be in Klobuchar’s crosshairs.
Ultimately, Klobuchar’s sweeping antitrust legislation would give government regulators and bureaucrats the ability to stack the deck against American companies in court, fundamentally reshaping the U.S. economy in the process. This would irrevocably damage the competitive process and use the full force of government power to punish disfavored companies.
Congress should reject The Competition and Antitrust Law Enforcement Reform Act.