WASHINGTON – U.S. Sen. Amy Klobuchar of Minnesota is calling for an overhaul of the nation's antitrust laws that would limit the way big corporations can merge to potentially dominate markets.
Klobuchar, the new chair of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, said she isn't trying to "punish" businesses. Instead, she hopes the legislation she introduced Thursday will "replenish competition and push for more startups."
"The United States once had some of the most effective antitrust laws in the world," said Klobuchar. But "our economy today faces a massive competition problem."
Klobuchar said current standards for proving that mergers could cause monopolies favor big business. She said court decisions have also limited the government's ability to block monopolization.
Klobuchar has written a book titled "Antitrust" scheduled to publish in April. She has long advocated for more antitrust scrutiny. With Democrats now in control of the Senate, her new role as antitrust subcommittee chair gives her a larger platform to pursue it.
"I worked for MCI in the private sector," said Klobuchar in an interview, remembering the breakup of telephone giant AT&T in the 1980s after an antitrust lawsuit. "I saw how costs of long distance went way down because of AT&T being pushed to compete more. And they had to break up the company. I saw the burgeoning of the cellphone industry because of that breakup."
Klobuchar's Competition and Antitrust Law Enforcement Reform Act shifts the burden for certain mergers and acquisitions to companies to prove that consolidation will not unfairly restrict markets. They would have to show that there are no "appreciable risks" of making markets less competitive.
In contrast, current law requires the government to prove that mergers would unfairly restrict markets.
The proposed new review process is aimed at mergers valued at greater than $5 billion, cases of extreme market concentration and the purchase of potential competing companies at an early stage. At stake is the ability of consumers to get lower prices driven by competition and workers to get fair wages because more employers will compete for their services.
Her legislation, co-sponsored by Sens. Richard Blumenthal, D-Conn., Cory Booker, D-N.J., and Edward Markey, D-Mass., could impact the market dominance of tech companies such as Google and Facebook.
Critics charge that those companies monopolize markets by buying potential competitors and using additional unfair strategies to stifle other companies from succeeding in the marketplace. That allows them to control pricing and access for consumers and pay lower wages, critics argue, and ensures their continued financial dominance. For instance, more than 90% of worldwide internet searches now go through Google.
Google, Facebook and the U.S. Chamber of Commerce did not respond to requests for comment on Klobuchar's bill.
The state's senior senator said there is "obvious consolidation in the digital industry." But she added that it is not just tech companies reducing market choices. Even the cat food industry is dominated by two big companies, she noted.
In addition to changing the way antitrust risk is analyzed, Klobuchar also wants to increase federal funding to enforce antitrust laws.
What Klobuchar proposes would be a "sea change" in how the law views mergers and acquisitions, said Tom Cotter, who teaches antitrust law at the University of Minnesota. "Shifting the burden of proof to the merging parties" and making potential "appreciable risk" the standard for denying consolidation have never been tried before in the U.S., he said.
Still, he added, "for the last 20 to 30 years, merger enforcement has not been as good as it should have been."
Charges of unfair competition have sometimes been hard to prove at the time of mergers. And deconstructing monopolies after the fact has proved legally difficult, according to Cotter.
So, too, could proving market dominance going forward.
Google, Facebook and some other firms "are involved in so many areas of commerce" that it could be hard to determine if they have overall dominance, Cotter said.
On the other hand, the political climate may be right for intervention.
"Certainly," said Cotter, "there is support these days from both sides of the aisle to subject tech companies to more scrutiny."
Jim Spencer • 202-662-7432