By: Tom Hebert
Sen. Amy Klobuchar (D-Minn.) has introduced the “Platform Competition and Opportunity Act,” a bill that would prevent a handful of targeted companies from making any new acquisitions of smaller companies. This bill is companion legislation to H.R. 3826, sponsored by Rep. Hakeem Jeffries (D-N.Y.).
If implemented, this bill will throttle competition and give the Biden Administration sweeping new power to control the economy. Lawmakers should reject this legislation.
The bill is clearly written to target several companies that liberal lawmakers have decided need to be cut down to size. The legislation applies to companies with 50 million monthly users and market capitalization larger than $600 billion, which the bill euphemistically calls “covered platforms.”
Here’s the catch – the covered platform designation is determined only at the date of enactment. Only five companies would currently qualify as covered platforms – Amazon, Apple, Facebook, Google, and Microsoft. At the same time, the bill would exempt companies that grow large enough to hit the definition after the date of enactment.
This exemption begs the question – if banning M+A activity by companies above this threshold is critically important to protecting competition, how come there is a carveout for companies that hit the threshold after the date of enactment? It seems like this bill is crafted to target a few select companies while sparing others from the government’s regulatory sledgehammer.
The bill also changes the rules of monopoly cases for targeted companies. Under current law, if a trial lawyer or government enforcer brings an antitrust suit against a company, the burden is on the plaintiff to prove that the business conduct in question violates antitrust law. Under the Klobuchar bill, the burden of proof is reversed – a targeted company will be presumed guilty of anticompetitive conduct until proven innocent, deeply out of step with the basic tenets of the American legal system.
This bill is a government power grab, plain and simple. 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.
If signed into law, this bill will drastically hamper M+A activity that drives innovation and economic growth. 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 far less incentive to take on the risk that comes with starting a new company.
Ultimately, the Klobuchar bill is crony capitalism at work, not a consumer-based approach to antitrust legislation. Lawmakers should reject the Platform Competition and Opportunity Act.