Progressives Introduce New Bill to Ban Large Mergers and Acquisitions
With little chance of passage, are progressives attacking or feinting moderates?
Over the past few years, lawmakers have considered tightening rules around mergers and acquisitions (M&As) as a way to rein in Big Tech’s bigness. Last week, in a rather unexpected move, progressives in Congress unveiled their counter to previous antitrust legislation. The bicameral Prohibiting Anticompetitive Mergers Act — sponsored by Sen. Elizabeth Warren (D-MA) and Rep. Mondaire Jones (D-NY) — takes the idea of restricting M&As a few steps further than previous bills, raising questions about Democrats’ unity and strategy around antitrust reform.
PAMA’s main provision would prohibit M&As that would give the acquirer “a market share of greater than 33 percent of any relevant market… or greater than 25 percent of any labor market as an employer.” The bill would also ban any acquisition that would give the acquirer assets and voting securities in excess of $5 billion. Unlike previous legislation to reform M&As, PAMA appears to make no major distinction between online platforms and other non-tech “dominant firms.” In other words, PAMA covers all large M&As, not just those by tech companies.
Additionally, within that same section, PAMA would significantly reframe how regulators approach antitrust. Currently, under the Consumer Welfare Standard, “business conduct and mergers are evaluated to determine whether they harm consumers.” PAMA would shift this framework to include harms to workers, sellers, local, rural, or low-income communities, and communities of color. PAMA goes so far as to include harms to privacy, quality entrepreneurship, and innovation.
Interestingly, PAMA also includes an odd provision that states “[neither] quantitative evidence nor a definition of a relevant market or market share shall be required to establish a violation.”
Most consequentially, PAMA is not purely prospective legislation. It would allow the Federal Trade Commission (FTC), Department of Justice (DOJ), and state attorneys general to retrospectively review previously approved M&As. In fact, PAMA not only allows for retrospective review of M&As, it demands them. Section 6 of the bill requires the FTC and Assistant Attorney General for the Antitrust Division of the DOJ to “immediately review every prohibited merger consummated on or after January 1, 2000.”
For M&As found to be in violation of the new law, PAMA orders “a remedy to restore competition.” These remedies include “unwinding the acquisition” or requiring acquirers to spin-off “standalone business units.” Under PAMA, Microsoft’s 2016 acquisition of LinkedIn, Disney’s 2019 merger with 21st Century Fox, and T-Mobile’s 2020 merger with Sprint among others would all have to be unwound or otherwise “remedied.”
PAMA is not the only legislation making its way through Congress that addresses M&As. Rep. David Cicilline (D-RI) and Sen. Amy Klobuchar (D-MN) — the respective chairs of the House and Senate Judiciary Subcommittees on Antitrust — are championing the Platform Competition and Opportunity Act. This bill would make it illegal for any “covered platform” to acquire “the whole or any part of” the stock, share capital, or assets of “any person engaged in commerce or in any activity affecting commerce.”
In contrast to PAMA, the Platform Competition and Opportunity Act is narrowly focused on M&As by Big Tech. As I wrote last November, the Platform Competition and Opportunity Act would “effectively ban Google, Amazon, Facebook, Microsoft, and Apple” from nearly all M&As, leaving most other non-tech companies alone.
While the House and Senate continue working to resolve the relatively minor differences in their approach to antitrust reform, Democrats have appeared mostly united. Even the White House implicitly gave antitrust reform its blessing back in early February. The disparity between these two approaches begs the question of why progressives in Congress decided to introduce their own partisan legislation that lacks the essential support of either Sen. Klobuchar or Rep. Cicilline.
One interpretation could be that progressives in Congress introduced PAMA as a way to shift the Overton Window on antitrust. While that Platform Competition and Opportunity Act has received some bipartisan support and passed through committee, it appears to have mostly stalled. By introducing a more radical approach to M&A reform, progressives might be attempting to give moderates political cover to advance more moderate legislation against a vocal opposition.
Another interpretation could be that progressives like Sen. Bernie Sanders (I-VT), Rep. Alexandria Ocasio-Cortez (D-NY), and Rep. Rashida Tlaib, (D-MI) — all of whom have signed on to PAMA — support this alternate legislation because the moderate approach does not go far enough. While Rep. Jones did cosponsor the Platform Competition and Opportunity Act, Sen. Warren was notably absent. In her press release for PAMA’s introduction, Sen. Warren stated “big companies have had almost free reign over our economy, squashing competitors, growing bigger and bigger, and abusing their market power to price gouge consumers and crush workers and small businesses.”
Progressives are concerned about Big Tech, but they also see reforming antitrust through a broader lens. To them, anticompetitive practices of “big business” extend beyond Silicon Valley to practically every major industry. Introducing PAMA now could be an attempt to capitalize on the current momentum on antitrust reform and broaden Congress’ narrow focus on Big Tech to include other industries.
Regardless of their intention, it is unlikely that any partisan legislation like PAMA will move this year. If it were to begin moving through Congress, Sen. Warren and Rep. Jones would need the support of both Sen. Klobuchar and Rep. Cicilline as the chairs of the subcommittees of jurisdiction. The media buzz around PAMA indicates that, if it is a messaging bill, then it has already served its purpose well.
If Democrats are to pass M&A reform, they will need to address the moderate and progressive approaches at some point. PAMA has effectively planted the flag for progressives. Now, the ball is back in the moderates’ court and it remains to be seen how they will respond.