Competition and Antitrust Law Enforcement Reform Act of 2021

II 117TH CONGRESS 1ST SESSION S. 225 To reform the antitrust laws to better protect competition in the American economy, to amend the Clayton Act to modify the standard for an unlawful acquisition, to deter anticompetitive exclusionary conduct that harms competition and consumers, to enhance the ability of the Depart- ment of Justice and the Federal Trade Commission to enforce the anti- trust laws, and for other purposes. IN THE SENATE OF THE UNITED STATES FEBRUARY 4, 2021 Ms. KLOBUCHAR (for herself, Mr. BLUMENTHAL, Mr. BOOKER, Mr. MARKEY, and Mr. SCHATZ) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To reform the antitrust laws to better protect competition in the American economy, to amend the Clayton Act to modify the standard for an unlawful acquisition, to deter anticompetitive exclusionary conduct that harms competition and consumers, to enhance the ability of the Department of Justice and the Federal Trade Com- mission to enforce the antitrust laws, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 225 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Competition and Anti- 2 trust Law Enforcement Reform Act of 2021’’. 3 SEC. 2. FINDINGS AND PURPOSES. 4 (a) FINDINGS.—Congress finds that— 5 (1) competitive markets, in which multiple 6 firms compete to buy and sell products and services, 7 are critical to ensuring economic opportunity for all 8 people in the United States and providing resilience 9 to the economy during unpredictable times; 10 (2) when companies compete, businesses offer 11 the highest quality and choice of goods and services 12 for the lowest possible prices to consumers and other 13 businesses; 14 (3) competition fosters small business growth, 15 reduces economic inequality, and spurs innovation 16 and job creation; 17 (4) in the United States economy today, the 18 presence and exercise of market power is substantial 19 and growing; 20 (5) the presence and exercise of market power 21 makes it more difficult for people in the United 22 States to start their own businesses, depresses 23 wages, and increases economic inequality, with par- 24 ticularly damaging effects on historically disadvan- 25 taged communities; 26 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 225 IS (6) market power and undue market concentra- 1 tion contribute to the consolidation of political 2 power, undermining the health of democracy in the 3 United States; 4 (7) the anticompetitive effects of monopoly 5 power or buyer market power include higher prices, 6 lower quality, lessened choice, reduced innovation, 7 foreclosure of competitors, and increased entry bar- 8 riers; 9 (8) monopsony power or seller market power al- 10 lows a firm to force suppliers of goods or services to 11 accept below market prices or to force workers to ac- 12 cept below market wages, resulting in lower quality 13 products and services, reduced opportunities for sup- 14 pliers and workers, reduced availability of products 15 and services for consumers, reduced innovation, fore- 16 closure of competitors, and increased entry barriers; 17 (9) horizontal consolidation, vertical consolida- 18 tion, and conglomerate mergers all have potential to 19 increase market power and cause anticompetitive 20 harm; 21 (10) extensive consolidation is reducing com- 22 petition and threatens to place the American dream 23 further out of reach for many consumers in the 24 United States; 25 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 225 IS (11) since 2008, firms in the United States 1 have engaged in over $10,000,000,000,000 in merg- 2 ers and acquisitions; 3 (12) the acquisition of nascent or potential ri- 4 vals by dominant firms can present significant long- 5 term threats to competition and innovation; 6 (13) the acquisition, by one of its competitors, 7 of a maverick firm that plays a disruptive role in the 8 market—by using an innovative business model or 9 technology, offering lower prices or new, different 10 products or services products, or by other means 11 that benefit consumers—can present a threat to 12 competition; 13 (14) section 7 of the Clayton Act (15 U.S.C. 14 18), is the primary line of defense against anti- 15 competitive mergers; 16 (15) in recent years, some court decisions and 17 enforcement policies have limited the vitality of the 18 Clayton Act to prevent harmful consolidation by— 19 (A) discounting previously accepted pre- 20 sumptions that certain acquisitions are anti- 21 competitive; 22 (B) focusing inordinately on the effect of 23 an acquisition on price in the short term, to the 24 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 225 IS exclusion of other potential anticompetitive ef- 1 fects; 2 (C) underestimating the dangers that hori- 3 zontal, vertical, and conglomerate mergers will 4 lower quality, reduce choice, impede innovation, 5 exclude competitors, increase entry barriers, or 6 create buyer power, including monopsony 7 power; and 8 (D) requiring the government to prove 9 harmful effects of a proposed merger to a near 10 certainty; 11 (16) anticompetitive exclusionary conduct con- 12 stitutes a particularly harmful exercise of market 13 power and a substantial threat to the United States 14 economy; 15 (17) when dominant sellers exercise market 16 power, they harm buyers by overcharging them, re- 17 ducing product or service quality, limiting their 18 choices, and impairing innovation; 19 (18) when dominant buyers exercise market 20 power, they harm suppliers by underpaying them, 21 limiting their business opportunities, and impairing 22 innovation; 23 (19) when dominant employers exercise market 24 power, they harm workers by paying them low 25 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 225 IS wages, reducing their benefits, and limiting their fu- 1 ture employment opportunities; 2 (20) nascent or potential rivals—even those 3 that are unprofitable or inefficient—can be an im- 4 portant source of competitive discipline for dominant 5 firms; 6 (21) antitrust enforcement against anticompeti- 7 tive exclusionary conduct has been impeded when 8 courts have declined to rigorously examine the facts 9 in favor of relying on inaccurate economic assump- 10 tions that are inconsistent with contemporary eco- 11 nomic learning, such as presuming that market 12 power is not durable and can be expected to self-cor- 13 rect, that monopolies can drive as much or more in- 14 novation than a competitive market, that above-cost 15 pricing cannot harm competition, and other flawed 16 assumptions; 17 (22) the courts of the United States have im- 18 properly implied immunity from the antitrust laws 19 based on Federal regulatory statutes, even limiting 20 the application of statutory antitrust savings clauses 21 passed by Congress; 22 (23) the civil remedies currently available to 23 cure violations of the Sherman Antitrust Act, includ- 24 ing injunctions, equitable monetary relief, and pri- 25 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 225 IS vate damages, have not proven sufficient, on their 1 own, to deter anticompetitive conduct; 2 (24) in some cases, effective deterrence requires 3 the imposition of civil penalties, alone or in combina- 4 tion with existing remedies, including structural re- 5 lief, behavioral relief, private damages, and equitable 6 monetary relief, including disgorgement and restitu- 7 tion; and 8 (25) Federal antitrust enforcement budgets 9 have failed to keep pace with the growth of the econ- 10 omy and increasing demands on agency resources, 11 significantly undermining the ability of the Federal 12 antitrust agencies to fulfill their law enforcement 13 missions and contributing to the rise of market 14 power in the American economy. 15 (b) PURPOSES.—The purposes of this Act are to— 16 (1) enhance competition throughout the Amer- 17 ican economy by strengthening antitrust enforce- 18 ment by the Department of Justice, the Federal 19 Trade Commission, the State enforcement agencies, 20 and private parties; 21 (2) revise the legal standard under section 7 of 22 the Clayton Act to better enable enforcers to arrest 23 the likely anticompetitive effects of harmful mergers 24 in their incipiency, as Congress intended, by clari- 25 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 225 IS fying that the potential effects that may justify pro- 1 hibiting a merger under the Clayton Act include 2 lower quality, reduced choice, reduced innovation, 3 the exclusion of competitors, or increased entry bar- 4 riers, in addition to increased price to buyers or re- 5 duced price to sellers; 6 (3) amend the Clayton Act to clarify that an 7 acquisition that tends to create a monopsony violates 8 the Clayton Act; 9 (4) establish simple, cost-effective decision rules 10 that require the parties to certain acquisitions that 11 either significantly increase concentration or are ex- 12 tremely large bear the burden of establishing that 13 the acquisition will not materially harm competition; 14 (5) prohibit and deter exclusionary conduct that 15 harms competition, particularly by dominant firms; 16 (6) enable the Department of Justice and the 17 Federal Trade Commission to seek civil monetary 18 penalties, in addition to existing remedies, for viola- 19 tions of the Sherman Act; 20 (7) give the Department of Justice and the 21 Federal Trade Commission additional financial re- 22 sources and enforcement tools to craft remedies for 23 individual violations that are effective to deter future 24 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 225 IS unlawful conduct and proportionate to the gravity of 1 the violation; 2 (8) provide further protections for those who 3 provide evidence of anticompetitive conduct to gov- 4 ernment enforcers and potential financial rewards 5 for whistleblowers who provide information to the 6 government that leads to a criminal fine; and 7 (9) grant successful antitrust plaintiffs the 8 right to obtain prejudgment interest on damages 9 awards to further deter anticompetitive conduct and 10 more fully compensate injured parties. 11 SEC. 3. DEFINITION. 12 In this Act the term ‘‘antitrust laws’’— 13 (1) has the meaning given the term in the first 14 section of the Clayton Act (15 U.S.C. 12); and 15 (2) includes— 16 (A) section 5 of the Federal Trade Com- 17 mission Act (15 U.S.C. 45) to the extent that 18 such section applies to unfair methods of com- 19 petition; and 20 (B) this Act and the amendments made by 21 this Act. 22 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 225 IS SEC. 4. UNLAWFUL ACQUISITIONS. 1 (a) MARKET POWER.—Section 1(a) of the Clayton 2 Act (15 U.S.C. 12(a)) is amended by adding at the end 3 the following: 4 ‘‘the term ‘market power’ in this Act means the 5 ability of a person, or a group of persons acting in 6 concert, to profitably impose terms or conditions on 7 counterparties, including terms regarding price, 8 quantity, product or service quality, or other terms 9 affecting the value of consideration exchanged in the 10 transaction, that are more favorable to the person or 11 group of persons imposing them than what the per- 12 son or group of persons could obtain in a competi- 13 tive market.’’. 14 (b) UNLAWFUL ACQUISITIONS.—Section 7 of the 15 Clayton Act (15 U.S.C. 18) is amended— 16 (1) in the first and second undesignated para- 17 graphs, by striking ‘‘substantially to lessen’’ each 18 place that term appears and inserting ‘‘to create an 19 appreciable risk of materially lessening’’; 20 (2) by inserting ‘‘or a monopsony’’ after ‘‘mo- 21 nopoly’’ each place that term appears; and 22 (3) by adding at the end the following: 23 ‘‘In a case brought by the United States, the Federal 24 Trade Commission, or a State attorney general, a court 25 shall determine that the effect of an acquisition described 26 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 225 IS in this section may be to create an appreciable risk of ma- 1 terially lessening competition or to tend to create a monop- 2 oly or a monopsony, in or affecting commerce, if— 3 ‘‘(1) the acquisition would lead to a significant 4 increase in market concentration in any relevant 5 market; 6 ‘‘(2)(A) the acquiring person has a market 7 share of greater than 50 percent or otherwise has 8 significant market power, as a seller or a buyer, in 9 any relevant market, and as a result of the acquisi- 10 tion, the acquiring person would obtain control over 11 entities or assets that compete or have a reasonable 12 probability of competing with the acquiring person 13 in the same relevant market; or 14 ‘‘(B) as a result of the acquisition, the acquir- 15 ing person would obtain control over entities or as- 16 sets that have a market share of greater than 50 17 percent or otherwise have significant market power, 18 as a seller or a buyer, in any relevant market, and 19 the acquiring person competes or has a reasonable 20 probability of competing with the entities or assets 21 over which it would obtain control, as result of the 22 acquisition, in the same relevant market; 23 ‘‘(3) the acquisition would lead to the combina- 24 tion of entities or assets that compete or have a rea- 25 VerDate Sep 11 2014 19:24 Feb 25, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S225.IS S225 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 225 IS sonable probability of competing in a relevant mar- 1 ket, and either the acquiring person or the entities 2 or assets over which it would obtain control pre- 3 vents, limits, or disrupts coordinated interaction 4 among compet [Text truncated for display. 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