II 116TH CONGRESS 2D SESSION S. 3426 To deter anticompetitive exclusionary conduct that harms competition and consumers, to enhance the ability of the Department of Justice and the Federal Trade Commission to enforce the antitrust laws, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 10, 2020 Ms. KLOBUCHAR (for herself, Mr. BLUMENTHAL, and Mr. BOOKER) intro- duced the following bill; which was read twice and referred to the Com- mittee on the Judiciary A BILL 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 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Anticompetitive Exclu- 4 sionary Conduct Prevention Act of 2020’’. 5 SEC. 2. FINDINGS AND PURPOSES. 6 (a) FINDINGS.—Congress finds that— 7 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 2 •S 3426 IS (1) competitive markets, in which multiple 1 firms compete to buy and sell products and services, 2 are critical to ensuring economic opportunity for all 3 people in the United States; 4 (2) when companies compete, businesses offer 5 the highest quality and choice of goods and services 6 for the lowest possible prices to consumers and other 7 businesses; 8 (3) competition fosters small business growth, 9 reduces economic inequality, and spurs innovation 10 and job creation; 11 (4) in the United States economy today, the ex- 12 ercise of market power is substantial and growing; 13 (5) anticompetitive exclusionary conduct is an 14 important source of market power and a substantial 15 threat to the United States economy; 16 (6) when dominant sellers exercise market 17 power, they harm buyers by overcharging them, re- 18 ducing product or service quality, limiting their 19 choices, and impairing innovation; 20 (7) when dominant buyers exercise market 21 power, they harm suppliers by underpaying them, 22 limiting their business opportunities, and impairing 23 innovation; 24 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 3 •S 3426 IS (8) when dominant employers exercise market 1 power, they harm workers by paying them low 2 wages, reducing their benefits, and limiting their fu- 3 ture employment opportunities; 4 (9) nascent or potential rivals can be an impor- 5 tant source of competitive discipline for dominant 6 firms; 7 (10) antitrust enforcement against anticompeti- 8 tive exclusionary conduct has been impeded when 9 courts have declined to rigorously examine the facts 10 in favor of inaccurate economic assumptions that are 11 inconsistent with contemporary economic learning, 12 such as presuming that market power is not durable 13 and can be expected to self-correct, that monopolies 14 drive innovation, that above-cost pricing cannot 15 harm competition, and other flawed assumptions; 16 and 17 (11) 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 (b) PURPOSES.—The purposes of this Act are to— 23 (1) deter exclusionary conduct that harms com- 24 petition, particularly by dominant firms; and 25 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 4 •S 3426 IS (2) enhance antitrust enforcement by the De- 1 partment of Justice, the Federal Trade Commission, 2 the State enforcement agencies, and private parties. 3 SEC. 3. DEFINITION. 4 In this Act, the term ‘‘antitrust laws’’— 5 (1) has the meaning given the term in sub- 6 section (a) of section 1 of the Clayton Act (15 7 U.S.C. 12); 8 (2) includes— 9 (A) section 5 of the Federal Trade Com- 10 mission Act (15 U.S.C. 45) to the extent that 11 such section applies to unfair methods of com- 12 petition; and 13 (B) this Act and the amendments made by 14 this Act. 15 SEC. 4. EXCLUSIONARY CONDUCT. 16 (a) IN GENERAL.—The Clayton Act (15 U.S.C. 12 17 et seq.) is amended by inserting after section 26 (15 18 U.S.C. 26a) the following: 19 ‘‘SEC. 26A. EXCLUSIONARY CONDUCT. 20 ‘‘(a) DEFINITIONS.—In this section: 21 ‘‘(1) EXCLUSIONARY CONDUCT.— 22 ‘‘(A) IN GENERAL.—The term ‘exclu- 23 sionary conduct’ means conduct that— 24 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 5 •S 3426 IS ‘‘(i) materially disadvantages one or 1 more actual or potential competitors; or 2 ‘‘(ii) tends to foreclose or limit the op- 3 portunity of one or more actual or poten- 4 tial competitors to compete. 5 ‘‘(B) LIMITATIONS.— 6 ‘‘(i) Applying for or enforcing a pat- 7 ent, trademark, or copyright, unless such 8 applications or enforcement actions are 9 baseless or made in bad faith, shall not 10 alone constitute exclusionary conduct, but 11 such actions may be considered as part of 12 a course of conduct that constitutes exclu- 13 sionary conduct. 14 ‘‘(ii) Conduct that is necessary to 15 comply with Federal or State law shall not 16 alone constitute exclusionary conduct, but 17 such actions may be considered as part of 18 a course of conduct that constitutes exclu- 19 sionary conduct. 20 ‘‘(2) MARKET POWER.—The term ‘market 21 power’ means the ability of a person, or a group of 22 persons acting in concert, to profitably impose trans- 23 action terms on counterparties, including terms re- 24 garding price, quantity, product or service quality, 25 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 6 •S 3426 IS or other terms affecting the value of consideration 1 exchanged in the transaction, that are more favor- 2 able to the person or group of persons than what the 3 person or group of persons could obtain in a com- 4 petitive market. 5 ‘‘(b) VIOLATION.— 6 ‘‘(1) IN GENERAL.—It shall be unlawful for a 7 person, acting alone or in concert with other per- 8 sons, to engage in exclusionary conduct that pre- 9 sents an appreciable risk of harming competition. 10 ‘‘(2) UNFAIR METHOD OF COMPETITION.—A 11 violation of paragraph (1) shall constitute an unfair 12 method of competition under section 5 of the Fed- 13 eral Trade Commission Act (15 U.S.C. 45). 14 ‘‘(c) PRESUMPTION.— 15 ‘‘(1) IN GENERAL.—Exclusionary conduct shall 16 be presumed to present an appreciable risk of harm- 17 ing competition and shall be a violation of subsection 18 (b)(1) if the exclusionary conduct is undertaken, 19 with respect to a relevant market, by a person or by 20 a group of more than 1 person acting in concert 21 that— 22 ‘‘(A) has a market share of greater than 23 50 percent as a seller or a buyer in the relevant 24 market; or 25 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 7 •S 3426 IS ‘‘(B) otherwise has significant market 1 power in the relevant market. 2 ‘‘(2) EXCEPTION.—The presumption in para- 3 graph (1) shall be rebutted if the defendant estab- 4 lishes, by a preponderance of the evidence, that— 5 ‘‘(A) distinct procompetitive benefits of the 6 exclusionary conduct in the relevant market 7 eliminate the risk of harming competition pre- 8 sented by the exclusionary conduct; 9 ‘‘(B) one or more persons, not including 10 any person participating in or facilitating the 11 exclusionary conduct, have entered or expanded 12 their presence in the market with the effect of 13 eliminating the risk of harming competition 14 posed by the exclusionary conduct; or 15 ‘‘(C) the exclusionary conduct does not 16 present an appreciable risk of harming competi- 17 tion. 18 ‘‘(d) CONSIDERATIONS.—If the presumption in sub- 19 section (c) does not apply, the determination of whether 20 exclusionary conduct presents an appreciable risk of harm- 21 ing competition shall be based on the totality of the cir- 22 cumstances, which may include consideration of— 23 ‘‘(1) the extent to which any distinct procom- 24 petitive benefits of the exclusionary conduct substan- 25 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 8 •S 3426 IS tially eliminate the risk of harming to competition 1 presented by the exclusionary conduct; and 2 ‘‘(2) whether one or more persons, not includ- 3 ing any person participating in or facilitating the ex- 4 clusionary conduct, have entered or expanded their 5 presence in the market, substantially eliminating the 6 risk of harming competition presented by the exclu- 7 sionary conduct. 8 ‘‘(e) LIMITATIONS.—Although the following cir- 9 cumstances may constitute evidence of a violation of sub- 10 section (b)(1), such violation does not require finding— 11 ‘‘(1) that the unilateral conduct of the defend- 12 ant altered or terminated a prior course of dealing 13 between the defendant and a person subject to the 14 exclusionary conduct; 15 ‘‘(2) that the defendant treated persons subject 16 to the exclusionary conduct differently than the de- 17 fendant treated other persons; 18 ‘‘(3) that any price of the defendant for a prod- 19 uct or service was below any measure of the costs 20 to the defendant of providing the product or service; 21 or 22 ‘‘(4) that the conduct of the defendant makes 23 no economic sense apart from its tendency to reduce 24 competition. 25 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 9 •S 3426 IS ‘‘(f) CIVIL PENALTIES.—Any person who violates 1 subsection (b)(1) shall be liable to the United States for 2 a civil penalty, which may be recovered in a civil action 3 brought by the Attorney General of the United States, of 4 not more than the greater of— 5 ‘‘(1) 15 percent of the total United States reve- 6 nues of the person for the previous calendar year; or 7 ‘‘(2) 30 percent of the United States revenues 8 of the person in any line of commerce affected or 9 targeted by the unlawful conduct during the period 10 of the unlawful conduct.’’. 11 (b) FEDERAL TRADE COMMISSION ACT.— 12 (1) CIVIL PENALTIES.—Section 5 of the Fed- 13 eral Trade Commission Act (15 U.S.C. 45) is 14 amended by adding at the end the following: 15 ‘‘(o) CIVIL PENALTY FOR VIOLATION OF SECTION 16 26A OF THE CLAYTON ACT.—The Commission may com- 17 mence a civil action in a district court of the United States 18 against any person, partnership, or corporation who vio- 19 lates subsection (a)(1) respecting an unfair method of 20 competition that constitutes a violation of section 26A of 21 the Clayton Act to recover a civil penalty, which shall ac- 22 crue to the United States, in an amount not more than 23 the greater of— 24 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 10 •S 3426 IS ‘‘(1) 15 percent of the total United States reve- 1 nues of the person, partnership, or corporation for 2 the previous calendar year; or 3 ‘‘(2) 30 percent of the United States revenues 4 of the person, partnership, or corporation in any line 5 of commerce affected or targeted by the unlawful 6 conduct during the period of the unlawful conduct.’’. 7 (2) COMMISSION LITIGATION AUTHORITY.—Sec- 8 tion 16(a)(2) of the Federal Trade Commission Act 9 (15 U.S.C. 56(a)(2)) is amended— 10 (A) in subparagraph (D), by striking ‘‘or’’ 11 after the semicolon; 12 (B) in subparagraph (E)— 13 (i) by moving the margins 2 ems to 14 the left; and 15 (ii) by inserting ‘‘or’’ after the semi- 16 colon; and 17 (C) inserting after subparagraph (E) the 18 following: 19 ‘‘(F) to recover civil penalties under sec- 20 tion 5(o) of this Act;’’. 21 SEC. 5. JOINT ENFORCEMENT GUIDELINES. 22 (a) IN GENERAL.—Not later than 1 year after the 23 date of enactment of this Act, the Attorney General and 24 the Federal Trade Commission shall issue joint guidelines 25 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 11 •S 3426 IS outlining policies, practices, and analytical techniques re- 1 lating to agency enforcement under section 26A of the 2 Clayton Act, as added by section 4 of this Act, including 3 agency policies for determining the appropriate amount of 4 a civil penalty to be sought under section 26A of the Clay- 5 ton Act and subsection (o) of section 5 of the Federal 6 Trade Commission Act (15 U.S.C. 45), as added by sec- 7 tion 4 of this Act, with the goal of promoting transparency 8 and deterring violations of section 26A of the Clayton Act. 9 (b) PENALTY CONSIDERATIONS.—In establishing the 10 guidelines described in subsection (a) regarding civil pen- 11 alties, the Attorney General and the Federal Trade Com- 12 mission shall consider the relevant factors to be used for 13 calculating an appropriate civil penalty for a particular 14 violation, including — 15 (1) the volume of commerce affected; 16 (2) the duration and severity of the unlawful 17 conduct; 18 (3) the intent of the person undertaking the un- 19 lawful conduct; 20 (4) the extent to which the unlawful conduct 21 was egregious or a clear violation of the law; 22 (5) whether the civil penalty is to be applied in 23 combination with other remedies for violations of 24 section 26A of the Clayton Act, including— 25 VerDate Sep 11 2014 04:18 Mar 13, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426 kjohnson on DSK79L0C42PROD with BILLS 12 •S 3426 IS (A) structural remedies, behavioral condi- 1 tions, or equitable disgorgement; or 2 (B) other remedies available under section 3 4, 4A, 15, or 16 of the Clayton Act (15 U.S.C. 4 15, 15a, 25, 26) or section 13(b) of the Federal 5 Trade Commission Act (15 U.S.C. 53(b)); 6 (6) whether the person has previously engaged 7 in the same or similar anticompetitive conduct; and 8 (7) whether the person undertook the conduct 9 in violation of a preexisting consent decree or court 10 order. 11 (c) UPDATES.—The Attorney General and the Fed- 12 eral Trade Commission shall update the joint guidelines 13 issued under subsection (a), as needed to reflect current 14 agency policies and practices, b [Text truncated for display. 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