Warren, AOC jump on band wagon to stop merger activity, introduce Pandemic Anti-Monopoly Act. Moratorium would last until the FTC unanimously decides the country is no longer in severe financial stress.
In light of the national emergency caused by the coronavirus pandemic, Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) are calling for a moratorium on risky mergers and acquisitions. Rep. David Cicilline (D-R.I.), Chairman of the House Judiciary Committee’s antitrust panel, proposed a similar temporary ban last week.
Warren and Ocasio-Cortez announced on April 28 that they will introduce the proposed "Pandemic Anti-Monopoly Act" to "stop large corporations from exploiting the pandemic to engage in harmful mergers and strengthen the federal government's ability to respond effectively to future crises." At an Open Markets Institute conference on April 23, Cicilline said that he would introduce similar legislation.
The calls for a halt to merger activity will not likely gain broad support, including the support of the federal antitrust agencies, which have continued to review deals during the pandemic with modified procedures. The FTC, however, has stayed administrative proceedings in a number of merger cases due to the pandemic.
The proposal by Warren and AOC would impose a moratorium on risky mergers and acquisitions until the FTC unanimously determines that small businesses, workers, and consumers are no longer under severe financial distress. This moratorium would include all companies with over $100 million in revenue or financial institutions with over $100 million in market capitalization; private equity companies, hedge funds, or companies that are majority-owned by a private equity company or hedge fund; companies with an exclusive patent that impacts the crisis like personal protective equipment; and transactions that must otherwise be reported to the FTC under current law. Additionally, the legislation would pause all waiting periods and deadlines imposed on antitrust agencies during the moratorium and direct the FTC to engage in rulemaking to establish a legal presumption against mergers and acquisitions that pose a risk to the government’s ability to respond to the national emergency.
Open Markets Institute response. The Open Markets Institute has applauded the effort by the lawmakers, saying that the moratorium is needed to "to prevent a wholesale concentration of additional power by corporations that already dominate or largely control their markets, especially in ways that may significantly worsen the crisis that now threatens America’s health, social, and economic systems."
"The proposal includes many of the right principles needed, including a merger ban," said Sandeep Vaheesan, legal director of Open Markets Institute. "It’s important that we not only pause mergers for the duration of the crisis, but also extend the ban well into the recovery phase. Independent businesses are struggling right now, while private equity and many large corporations are flush with cash and ready to go on acquisition sprees. If the government acts quickly, we can save the majority of independent firms and stem further concentration in the American economy. We just need to give independent firms the means to weather this unprecedented crisis and survive as autonomous businesses."
Companies: Open Markets Institute
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