Klobuchar Reintroduces Bill to Promote Competition and Improve Antitrust Enforcement

WASHINGTON – U.S. Senator Amy Klobuchar (D-MN), Chairwoman of the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, reintroduced legislation to reinvigorate America’s antitrust laws and restore competition to American markets. The Competition and Antitrust Law Enforcement Reform Act will give federal enforcers the resources they need to do their jobs, strengthen prohibitions on anticompetitive conduct and mergers, and make additional reforms to improve enforcement.

“Our economy has a major competition problem and it's hurting consumers, workers, and businesses. Our antitrust laws have not kept pace with the times, and as a result, consolidation and exclusionary conduct have run rampant.” said Klobuchar. “The Competition and Antitrust Law Enforcement Reform Act will be an important step toward overhauling and modernizing our laws so competition can flourish and American consumers are treated fairly.”

This bill is cosponsored by Senators Richard Blumenthal (D-CT), Cory Booker (D-NJ), Sheldon Whitehouse (D-RI), Ed Markey (D-MA), Mazie Hirono (D-HI), Ron Wyden (D-OR), Martin Heinrich (D-NM), Peter Welch (D-VT), Brian Schatz (D-HI), and Tina Smith (D-MN).

Many industries are consolidating as large mergers and acquisitions increase. Big companies are buying out upstart rivals before they can become a competitive threat. Harmful exclusionary practices by dominant companies – such as refusals to deal with rivals, restrictive contracting, and predatory pricing – squelch competition. U.S. antitrust law enforcement against powerful firms has lagged behind efforts in other developed countries, particularly when it comes to enforcement against the dominant digital platforms and other large corporations. To remedy these longstanding issues, the Competition and Antitrust Law Enforcement Reform Act will:

1. Increase Enforcement Resources

For years, enforcement budgets at the Justice Department’s Antitrust Division and Federal Trade Commission have failed to keep pace with the growth of the economy, the steady increase in merger filings, and increasing demands on the agency's resources. To enable the agencies to fulfill their missions and protect competition by bringing enforcement actions against the richest, most sophisticated companies in the world, this bill would authorize increases to each agency’s annual budget and ensure enforcers retain all fees generated from mergers for enforcement work.

2. Strengthen Prohibitions Against Anticompetitive Mergers

The bill would restore the original intent of Section 7 of the Clayton Act, which was designed to stop anticompetitive mergers in order to address competitive problems in their “incipiency” before they ripened and caused harm. As the law stands today due to court decisions, enforcers can block only the most egregious acquisitions, which has allowed many harmful mergers to escape scrutiny. To remedy this, the Competition and Antitrust Law Enforcement Reform Act will:

• Update the legal standard for permissible mergers. The bill amends the Clayton Act to forbid mergers that “create an appreciable risk of materially lessening competition” rather than mergers that “substantially lessen competition,” where “materially” is defined as “more than a de minimus amount.” By adding a risk-based standard and clarifying the amount of likely harm the government must prove, enforcers can more effectively stop anticompetitive mergers that currently slip through the cracks. The bill also clarifies that mergers that create a monopsony (the power to unfairly lower the prices a company it pays or wages it offers) violate the statute.

• Shift the burden to the merging parties to prove their merger will not violate the law. Certain categories of mergers pose significant risks to competition, but are still difficult and costly for the government to challenge in court. For those mergers, the bill shifts the legal burden from the government to the merging companies, which would have to prove that their mergers do not create an appreciable risk of materially lessening competition or tend to create a monopoly or monopsony. These categories include:
  • Mergers that significantly increase market concentration
  • Acquisitions of competitors or nascent competitors by a dominant firm (defined a 50% market share or possession of significant market power)
  • Mega-mergers valued at more than $5 billion

  3. Prevent Harmful Dominant Firm Conduct

  Decades of flawed court decisions have weakened the effectiveness of Section 2 of the Sherman Antitrust Act to prevent anticompetitive conduct by dominant companies. The bill creates a new provision under the Clayton Act to prohibit “exclusionary conduct” (conduct that materially disadvantages competitors or limits their opportunity to compete) that presents an “appreciable risk of harming competition.”

  4. The legislation would establish a new, independent FTC division to conduct market studies and merger retrospectives.

  5. Implement Additional Reforms to Enhance Antitrust Enforcement

  The Competition and Antitrust Law Enforcement Reform Act will also implement a series of reforms to seek civil fines for antitrust violations, study the effect of past mergers, strengthen whistleblower protections, forbid forced arbitration in class action lawsuits, and more.

  “Senator Klobuchar continues to be a wellspring of smart and constructive antitrust reforms that would strengthen the U.S. economy and afford critical protections to American consumers, workers and businesses. This bill would marry wisdom with boldness to curb anticompetitive mergers and monopolistic abuses using nimble, well-chosen enhancements to the substance, process, and resources essential to effective antitrust enforcement. Attentive legislation of this sort will give U.S. market competition a badly needed boost,” said Randy Stutz, President of the American Antitrust Institute.

  “CALERA is a much needed reset to address market concentration in the American economy. It proposes well thought out and balanced changes to our antitrust laws to stop further concentration of market power and to stop the largest corporations from denying opportunities to others to compete fairly. It also recognizes the need and provides more resources to enforce our antitrust laws. We look forward to working with Senator Klobuchar and others to revive our antitrust laws to deliver a more competitive marketplace for consumers,” Sumit Sharma, Senior Researcher, Consumer Reports.

  “We applaud Sen. Klobuchar for reintroducing this essential bill. It codifies necessary updates to the Clayton Act’s merger review and exclusionary conduct provisions, enables plaintiffs to get their day in court for anticompetitive harms, and ensures that merger filing fees are rightfully granted to both the DOJ’s Antitrust Division and to the FTC. This will help both agencies better protect consumers from anticompetitive abuses,” said Elise Phillips, Policy Counsel at Public Knowledge.

  “The Committee to Support the Antitrust Laws (COSAL) applauds Sen. Klobuchar for introducing the Competition and Antitrust Law Enforcement Reform Act. The range of reforms in CALERA will strengthen public and private antitrust enforcement, making our economy stronger and our marketplace fairer. Among its many excellent provisions, the legislation would curb forced arbitration and provide incentives to whistleblowers, which would help empower consumers and small businesses to hold big companies accountable for abusing their market power,” Kellie Lerner, COSAL President and Partner at Robins Kaplan, LLP.

  This legislation is endorsed by the American Antitrust Institute, Consumer Reports, Open Markets Institute, Public Knowledge, and COSAL. It is also endorsed by antitrust scholars including, Professor (emeritus) Jonathan Baker of American University Washington College of Law; Professor Nancy Rose of Massachusetts Institute of Technology; Professor (emeritus) Steven Salop of Georgetown University Law Center; Professor Fiona Scott Morton of the Yale University School of Management; Bill Baer, former Assistant Attorney General for Antitrust; Gene Kimmelman, former Deputy Assistant Attorney General for Antitrust; and John Newman Professor of Law, University of Miami and former Deputy Director of the FTC Bureau of Competition.