Last week, leaders of the largest social media platforms testified before Congress to address concerns about the role of such platforms in potentially spreading disinformation and allowing groups to coordinate attacks on U.S. government institutions.
In the wake of these hearings, it is important to remember the larger economic and policy context. Specifically, it is important to keep in mind that some law makers, particularly Amy Klobuchar (D-MN), want to make significant changes to the way competition policy functions in the United States to ultimately make it easier to effectively regulate the largest, most powerful technology companies. These changes would not only impact the merger evaluation process, but such changes would also reduce market concentration and limit the ability of firms with a market share of over 50% from engaging in a range of activities that harm smaller companies’ ability to fairly compete.
To better understand how that balance would be reconfigured, let’s take a closer look at S. 225, the “Competition and Antitrust Enforcement Act” (the “Klobuchar Bill”), proposed by Senator Klobuchar on February 4, 2021.
The Klobuchar Bill would make three principal changes to U.S. competition law and policy:
The Klobuchar Bill would (a) introduce tougher standards for evaluating the anticompetitive impact of mergers, (b) require firms with over 50% market share to shoulder the burden of establishing that the benefits of an acquisition would outweigh the potential risks, and (c) prohibit large firms from engaging in conduct that materially disadvantages smaller competitors.
It is too early to tell if Senator Klobuchar’s proposal will pass the Senate, where it faces stiff opposition from Republicans who are skeptical of the need to introduce significant changes to antitrust law. If the Klobuchar bill does pass the Senate, there is reason to believe it would be well-received in the House, as the Staff Report on competition in digital markets, issued by the U.S. House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law, recommended policy changes very similar to those set out in Klobuchar’s proposal.