Antitrust Legislation: A Congressional Priority Likely Punted To Next Year
The U.S. House and Senate are out of session this week for the Memorial Day holiday. When lawmakers return next week, it will be a sprint toward the August recess, after which campaigning for the 2022 midterm elections will begin in earnest.
In other words: there is not a lot of time left for policymaking. Specifically, there is not a lot of time left for lawmakers to finish and approve antitrust legislation that has been percolating in the halls of Congress for years, and which leaders in both parties say is a priority to complete this year.
Where are lawmakers on this important issue, and how likely is it that they will be able to advance historic legislation to President Joe Biden’s desk by the end of this year, which also is the end of the 117th Congress? Before delving into those questions, let’s start with a more basic one: what is the purpose of antitrust law?
What U.S. Antitrust Law Is Supposed to Do
According to the Congressional Research Service (or CRS, Congress’s apolitical research arm), broadly speaking, antitrust law is supposed to protect consumers and society as a whole by preserving market competition. Contemporary antitrust doctrine does this, CRS explains, “by prohibiting anticompetitive conduct and mergers that enable firms to exercise market power.”
There are two primary U.S. antitrust laws: The Sherman Antitrust Act of 1890 and The Clayton Antitrust Act of 1914.
The Sherman Act was the United States’ first antitrust law. It was passed in reaction to the growth of industrial giants like U.S. Steel and Standard Oil. As CRS explains, the law has two main provisions that today are enforced by the Antitrust Division of the Department of Justice (DOJ), the Federal Trade Commission (FTC), and private plaintiffs. The first provision keeps firms from colluding to restrict economic competition. The second makes it unlawful to monopolize or attempt to monopolize “any part of the trade or commerce among the several states, or with foreign nations.”
The Clayton Act bars certain forms of price discrimination and mergers. In 1914, Congress also passed the Federal Trade Commission Act, which established the Federal Trade Commission (FTC) – an agency charged with protecting consumers and competition.
Why Is Congress Interested in Antitrust Legislation Today?
According to a 2017 article in Harvard Business Review, antitrust policymaking waned after passage of the Clayton Act and, by the late 1970s, even enforcement had declined significantly due to “the rise of the Chicago School of Economics in the late 1970s.” According to the article, “By the Obama administration, [the United States] had neither a popular antitrust movement nor many significant antitrust prosecutions.”
Given that history, and the fact that the United States’ two primary antitrust laws have been on the books for more than a century, why is Congress so interested in this issue today?
One acronym has played a major factor: FAANG. Facebook, Amazon, Apple, Netflix, and Google. (Though Netflix is less of a concern as far as antitrust than the other four.) These companies have grown exponentially over the last two decades and have taken over a greater share of the many markets in which they operate.
When Sen. Elizabeth Warren (D-Mass.) was running for president in 2019, for example, she noted that nearly half of all e-commerce is done through Amazon, and more than 70 percent of all Internet traffic goes through sites that are owned or operated by Google or Facebook. She called for legislation that would prevent tech firms from both owning a platform (like search, for example) and competing with small businesses that use the platform. She also wanted new regulators who would be “committed to reverse illegal and anti-competitive tech mergers.”
Sen. Warren isn’t alone. Lawmakers in both the House and Senate – and from both parties – have become more vocal skeptics of the market power wielded by Big Tech in recent years.
Current House and Senate Antitrust Legislation
There is no shortage of antitrust legislation that has been offered in the House and Senate. Indeed, in June 2021, House Judiciary Committee Chair Jerrold Nadler (D-N.Y.) introduced a package of antitrust bills. They are the:
Merger Filing Fee Modernization Act, which would ensure the DOJ and FTC have the resources needed to enforce antitrust laws by increasing filing fees on large transactions and by ensuring the mergers that are most likely to consume agency time and resources pay more than others.
State Antitrust Enforcement Venue Act, which would ensure state attorneys general who bring antitrust cases in federal court do not face delays or higher costs due to the transfer of cases to a different venue.
Augmenting Compatibility and Competition by Enabling Service Switching Act, which gives the FTC new authority and enforcement tools to establish rules for interoperability and data portability online.
Platform Competition and Opportunity Act, which prohibits the largest online platforms from engaging in mergers that would eliminate competitors, or potential competitors, or that would serve to enhance or reinforce monopoly power.
Ending Platform Monopolies Act, which would authorize the FTC and DOJ to take action prevent dominant online platforms from leveraging their monopoly power to distort or destroy competition in markets that rely on that platform.
While this legislation is still viable in the House, where a simply Democratic majority can pass any bill, progress has been slow. The real action, somewhat counterintuitively, has been in the Senate, where only a bipartisan effort can see a bill become law.
The upper chamber is focused on bipartisan legislation offered by Sen. Amy Klobuchar (D-Minn.) and Sen. Chuck Grassley (R-Iowa) and approved by Senate Judiciary Committee earlier this year. The American Innovation and Choice Online Act would prohibit specific forms of conduct, including:
Preventing another business’s product or service from interoperating with the dominant platform or another business;
Requiring a business to buy a dominant platform’s goods or services for preferred placement on its platform;
Misusing a business’s data to compete against it; and
Biasing search results in favor of the dominant firm.
A companion bill has been introduced in the House, but it has not yet been considered by that chamber’s Judiciary Committee.
The Senate Judiciary Committee also has approved the Open App Act, which would prevent Apple and Google from granting preferential treatment to their own products in their app stores.
The Klobuchar-Grassley legislation faces opposition from California lawmakers who are worried that the legislation specifically targets companies that are based in their state. They also argue the bill would lead to tech company content moderation.
The legislation also faces stiff opposition from the U.S. Chamber of Commerce, which says it would “prohibit companies from not only offering competition on price but also extend a ban to prohibit them from competing on quality, service, security, privacy, and innovation.” According to the Center for Strategic and International Studies, opponents also have argued “that unequal rules could create arbitrary winners or losers in the marketplace and even benefit foreign competitors or bad actors at the expense of U.S. technological innovation.”
Sen. Klobuchar has tried to address these concerns but has so far been unsuccessful.
According to a report in The Hill today, Adam Kovacevich, who runs the Chamber of Progress, a group that represents tech firms, said revisions that Sens. Klobuchar and Grassley made to the bill “primarily address complaints of Republicans and corporate lobbyists rather than the Democrats who Klobuchar needs to move this bill.” He also noted the revisions create carve outs for banking and telecommunications companies, which would further focus the bill on technology companies that are disproportionately domiciled in California.
Majority Party Not Eager to Move Legislation
Senate Majority Leader Chuck Schumer (D-N.Y.) has said he will not allow a vote on any antitrust legislation in the Senate until he is certain it has filibuster-proof support, meaning 60 votes.
As readers know very well, that is a steep hill to climb—particularly in an election year. In fact, Politico has reported that lawmakers in electorally competitive districts and states have “cited the tech antitrust bill as an example of a potentially controversial vote that senators shouldn’t be forced to take just months out from the midterms.” According to Axios, polling from November 2021 in 20 battleground congressional districts showed Democrats and independents do not prioritize tech as a policy issue that would influence their votes even though many want “aggressive government intervention” to rein in the sector.
That’s why, as The Intercept concluded in April, “[tech] companies’ best chance to stop the legislation is to keep it off the Senate floor.” Doing so would not require a single senator to go on record and would keep the focus on issues that Democrats prefer to address during an election year.
Antitrust legislation? We’ll see you in the 118th Congress, and possibly beyond.