Today, I have something really interesting and exciting and sexy to talk to y'all about: antitrust law!

Amy Klobuchar is the new chair of the Senate Judiciary Subcommittee on Antitrust, and she is not fucking around. Late last week, she introduced the Competition and Antitrust Law Enforcement Reform Act of 2021 ("CALERA"), an omnibus bill that would revamp several areas of antitrust. She's also writing a book about antitrust law.

The CALERA bill would do some great things, like overhaul the government's standard of proof when blocking mergers, create an outright ban on certain types of mergers, and put the burden on the parties in certain high-stakes mergers to show the acquisition is legal, instead of the government having the burden of proving it's illegal.

It's not a perfect bill, but it's a huge step in the right direction. And with a little work, it could be even better.


A little history

The 21st century has seen almost no enforcement of antitrust laws, particularly in the tech sector. Even under the Obama administration, antitrust enforcement was seriously lacking.

In 2012, the Obama FTC approved the merger of Facebook and Instagram, two of the most widely used social media sites. Since 2005, Facebook has spent more than $23 billion buying other tech companies. It now owns companies all throughout different areas of the tech sector. Alphabet (Google) also gobbled up company after company to get its current monopoly power. Last year, the House Antitrust Report found that companies like Amazon, Apple, Alphabet (Google), and Facebook had "monopoly power."

Overall, Trump was not great at antitrust enforcement ... but, somehow, he actually wasn't the worst. At least with antitrust stuff, the old "even a broken clock is right twice a day" idiom rang true.

In the waning days of 2020, the FTC and DOJ filed two of the most significant antitrust cases in decades, accusing Facebook and Google of using their power as gatekeepers in the tech industry to destroy or acquire competitors to protect their monopoly power. The FTC is now seeking to unwind Facebook's purchase of Instagram that it approved less than a decade ago. These are two lawsuits filed under Trump that the Biden administration should absolutely continue to pursue.

The Biden administration is widely expected to crack down on monopolies and big tech — but then again, so was the Obama administration. President Biden's picks for the FTC and DOJ Antitrust Division have not yet been announced. They will be a good indicator of how aggressive the incoming administration expects to be. A coalition of organizations representing citizens "who are concerned about Amazon, Apple, Facebook, and Google's concentrated power" recently sent a letter to Klobuchar, Senate Judiciary Chair Dick Durbin, and Commerce Chair Maria Cantwell to urge them to "make clear that Big Tech executives, lobbyists, lawyers, or consultants are unacceptable nominees for senior antitrust enforcement roles."

Klobuchar's bill would give DOJ Antitrust and the FTC some needed tools for taking on mega-mergers and big tech.

Some lawsplainin'

Right now, there are two main antitrust laws: the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914. The Federal Trade Commission Act, which established the FTC, was also passed in 1914.

Both the DOJ Antitrust Division and FTC enforce antitrust laws. (I actually interned for DOJ Antitrust my 1L year, in the networks and technology section.) When it comes to big tech, the agencies work together to divide up the issues. A good example of this is that the DOJ filed the antitrust suit against Google, whereas the FTC filed the lawsuit against Facebook.

As the bill notes in its factual findings, "since 2008, firms in the United States have engaged in over $10,000,000,000,000 in mergers and acquisitions." So what would this bill actually do to strengthen our antitrust laws?

Stopping mergers

CALERA would fix some of the gaping, judicially created loopholes in our antitrust law. While its provisions are expected to be used to stop further consolidation in big tech, its provisions are neutral and not specific to the tech industry.

It would ban mergers that "create an appreciable risk of materially lessening competition" or create a monopoly or monopsony. It would also lower the standard the government has to meet to block a merger. Currently, the government has to prove that a merger or acquisition would "substantially lessen competition"; under this bill, it would have to show that a deal would "create an appreciable risk of materially lessening competition."

And it would shift the burden of proof in several types of high-risk mergers — in a deal valued at more than $5 billion or when a company aims to acquire a disruptive rival in their market, the companies involved in the merger would have to show it was legal, instead of the government having to show it's illegal. This means companies would have to be able to demonstrate the value of a proposed merger — not just for the companies involved, but also for the consumer and competition.

Under current rules, courts have required the government to meet a very high bar to block a merger. This framework would allow judges to use a risk-based approach, rather than requiring outright certainty.

Funding

CALERA would also drastically increase funding for the FTC and DOJ Antitrust by $300 million each, nearly doubling the FTC's budget and more than doubling the budget for DOJ Antitrust. It would raise at least some of this money by increasing the fees companies pay the government to review mega-mergers where the deal is over $5 billion.
Antitrust cases are notoriously complex and expensive to litigate; yet, the number of DOJ Antitrust and FTC lawyers has actually decreased since the 1980s. As Klobuchar has pointed out, the FTC and DOJ are going to need a lot more resources to "take on the biggest companies the world has ever known," including two more-than $1 trillion companies. "That's why you can pass all the bills you want, but if you can't enforce them, it doesn't matter."

Republican Senator Chuck Grassley has co-sponsored the bill increasing antitrust funding, and Klobuchar has said she thinks it's "the first thing that has a chance of passing."

Looks good, right?

The bill is good and would certainly be a step in the right direction. Its problems lie not in what it does, but what it doesn't do.

Klobuchar's proposal leaves some problematic doctrines intact. One reason antitrust law is such a shitshow right now is that the Clayton Act and Sherman Act use vague language, like asking whether a particular acquisition is "reasonable." This leaves a lot up to the courts to figure out on their own. So, while this proposal does some great, needed things, it also lacks some of the clear rules that we need to really overhaul judicial interpretation of our antitrust laws.

Like law professor Zephyr Teachout told Motherboard,

"We desperately need an overhaul, because Congress has let courts rewrite antitrust law for forty years," Zephyr Teachout, a law professor at Fordham University, told Motherboard. While it was "designed to jump-start hearings," she noted, it falls short of effecting large-scale change.

"The bill package, as it currently stands, won't transform antitrust, because instead of overturning decades of bad case law, it overturns some case law at the margins, leaves judges in the untenable position of deciding what is procompetitive behavior, and uses some language that reflects the Chicago School biases," she said, Chicago School referring to an antitrust approach advanced by certain economists and legal scholars out of the University of Chicago, that insisted price theory—not market structure—was key to ensuring competition.

CALERA includes a lot of great stuff! Stopping big tech mergers should be a huge priority for antitrust enforcement right now, and this bill gives our trustbusters more tools and more resources. Hopefully, with some amendments, it can become the antitrust bill we desperately need right now.

Here's the full text of the bill:


[ The Bill / Lexology / DOJ / Motherboard / House Antitrust Report / Fast Company ]

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Jamie Lynn Crofts
Jamie Lynn Crofts is sick of your bullshit. When she’s not wrangling cats, she’s probably writing about nerdy legal stuff, rocking out at karaoke, or tweeting about god knows what. Jamie would kindly like to remind everyone that it’s perfectly legal to tell Bob Murray to eat shit.
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