Antitrust proposal would empower bureaucrats and greedy trial lawyers
Originally Published in The Hill on 5/31/21 01:01 PM EDT
By: Tom Hebert
The Democratic Party is attempting to weaponize antitrust law to reshape the economy and punish successful American companies for political gain.
To that end, Sen. Amy Klobuchar (D-Minn.) has introduced the “Competition and Antitrust Law Enforcement Reform Act,” a grab-bag of liberal priorities that would stifle innovation and harm American consumers.
Notably, the Klobuchar bill shifts the burden of proof from the plaintiff to the defendant in some monopolization cases, overturning decades of antitrust enforcement precedent. Antitrust burden-shifting would give nearly unchecked power to unelected Biden appointees and fatten the coffers of greedy trial lawyers.
Currently, plaintiffs in a monopolization case need to prove that a company is engaging in anticompetitive conduct. Plaintiffs do this by defining the relevant market a company is operating in, then showing that the conduct in question will result in consumer harm.
Under the consumer welfare standard, which has anchored U.S. antitrust law for over four decades, consumer harm is measured through tangible economic effects and empirical evidence. Antitrust law under the consumer welfare standard allows business conduct that benefits Americans through lower prices, better quality products and greater access to goods and services.
The current antitrust enforcement process is broadly consistent with the tenets of the American legal system because it treats companies engaging in routine business activity with basic fairness and due process. This neutral application of antitrust law gives companies the certainty to compete and innovate in a way that benefits all Americans.
The Klobuchar bill flips the burden of proof on its head for certain monopolization cases by requiring companies involved in mergers or acquisitions prove that their transaction would not hurt competition. 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.
In practice, this would effectively ban certain companies from engaging in mergers and acquisitions, a routine business transaction that drives economic growth and innovation. This prohibition would likely lead to fewer startups, half of which say their most realistic long-term goal is to be acquired by a larger firm. Without the potential for acquisition, entrepreneurs would have a lot less incentive to take on the risk that comes with starting a new company.
The burden-shifting provision in the Klobuchar bill guarantees a dramatic increase in the number — and likely success of — monopolization cases brought against large companies. This surge in cases would only benefit two types of people — government antitrust enforcers and trial lawyers.
Instead of leaving key antitrust decisions in the hands of Trump-appointed federal judges, the Klobuchar bill empowers unelected Biden appointees at the Federal Trade Commission and Department of Justice to declare routine business activity illegal for purely political reasons. These government actors do not even have to define a relevant market or show consumer harm in order to accuse companies above a certain size of anticompetitive conduct.
Inverting the burden of proof would also create a cottage industry for greedy trial lawyers looking to profit off of gaming the American legal system. The potential damages from these suits can be enormous, and plaintiffs can accuse companies of anticompetitive behavior in court regardless of innocence or guilt. Even companies who have done nothing wrong would be forced to pay large sums to avoid an adverse ruling in court.
Above all, antitrust burden-shifting would harm American consumers. Companies under constant threat of predatory and abusive antitrust litigation would be less likely to innovate or engage in robust competition with rival firms. Less competition means fewer choices, higher prices and reduced access to goods and services for all Americans.
As we recover from the COVID-19 pandemic, stacking the deck in favor of Biden bureaucrats and greedy trial lawyers is clearly the wrong way to encourage economic growth and opportunity. Instead of going along with the left’s big government antitrust approach, Republicans should continue to champion a light-touch antitrust approach that protects consumer welfare and the competitive process.