This article is written by Apurv Umredkar, from KIIT School of Law, KIIT University, Bhubaneswar, Odisha.
The remarkable commencement of Biden’s Presidency brought with it one of most awaited amendments pertaining to Competition Law. The US Senator and lawyer from Minnesota Amy Klobuchar acting as a director of Judiciary Subcommittee on Antitrust along with Commerce Committee members Richard Blumenthal, Cory Booker, Ed Markey and Brian Schatz recently announced the modifications and upgradations in US Antitrust Laws by introducing Competition and Antitrust Law Enforcement Reform Act 2021 (CALERA) which aims to revitalize the existing antitrust regimes by eliminating the alleged shortcomings & providing efficient resources to Antitrust Officials, tighten the grip of Antitrust Officials on corporations and implementing necessary amendments to gear up the competition aspect of market. The bill is considered as a historical step in making better Competition Rules and Regulations across the United States as it includes major modifications in plans and policies. The overall objective of the bill is divided into three categories: a) adjusting the protocol implementation and shifting burden of proof to companies; b) thorough analysis and scrutiny of the resultant mergers or future mergers; c) providing sufficient enforcement tactics. The bill basically seeks to bring tactful reforms, amend some provisions of Clayton Antitrust Act, enhance the power of Antitrust Officers and shift the Burden of Proof along with other proposed changes.
The need to enact the increased vigilance and scrutiny on these big technology giants comes from ever increasing power and dominance of these conglomerates on the respective market sectors ultimately leading to threat to the market, consumers and other competitors. The bill if passed will strengthen the regulations on Antitrust conduct, making the laws effective enough to curb the illegal activities and conducts surrounding Competition Laws. In general, it will make it easier for enforcers to take up a case and simultaneously make it hard for companies to save themselves from the former’s radar. The companies will be required to produce certificates and documents proving that the resultant merger will not cause any harm to stipulated regimes. The widespread implications of this law will not be confined to Competition perspective only, but will heavily affect the other economic aspects as well.
Need for reforms : enforcer’s aspect
The head of subcommittee Amy Jean Klobuchar (who is a democrat and is under the cabinet of Mr Joe Biden) served as a front leading person while announcing the bill. Recently an announcement of book launch was also made by her. The book is based on the topic revolving around Antitrust Issues. She was also involved in passing some remarkable Antitrust Amendments. She stated that there’s a lot to reform in order to fight the global corporations in Antitrust Battles was of the view that the current protocols are not strong enough and consists of various loopholes allegedly misused by the companies in order to avoid systematic Antitrust investigations.
She also laid emphasis on the flawed interpretations of Antitrust Rules by court. As per her claims ‘The five major tech corporations (Google, Facebook, Amazon, Apple and Microsoft) are always under the vigilance due to the dominant monopoly they have over the technology products and services market’. The enactment of the bill will lead to higher coverage of companies under the same jurisdictional regimes and a stronger hold on the certain mergers likely to harm competition regulations.
The bill seeks to achieve the following points as mentioned in the document –
- Increasing the threshold for dominant players trying to merge, acquire or amalgamate other players.
- Authorizing revised budget for Antitrust Division, Department of Justice.
- Formulation of independent and impartial Office of Antitrust Lawyer in the Federal Trade Commission for conducting market researches, analyzing mergers and handling consumer cases.
- Increase in rewards and incentives to whistleblowers
- Prohibiting ‘Exclusionary Conduct’ “thereby making it difficult for companies to prove the absence of any ill impact of merger on the market.
The above mentioned points are briefly explained in detail below –
- Fresh Budget for Antitrust Officials – According to the bill, an additional $300 Million is proposed to be given to both – Federal Trade Commission and Antitrust Wing of Department of Justice each. This will make sure that there isn’t any inaction or lack of necessary monetary support so that the agencies can fully concentrate on their task and protect competition across the market. The officials will now be able to further their research and analysis for further Antitrust proceedings.
- Improving the standard of prohibitions against anti-competitive conduct – The existing provision stipulates for exemption to various mergers and combinations which fall below the threshold set by the legislation. This way various transactions that had the capacity to affect competition were passed in spite of the potential threat. The new proposed bill seeks to increase the scope of threshold so that mergers that have a harm on competition must be corrected and then proceed further. It aims to bring back and implement the provisions of Section 7 of the Clayton Act. After the change, it will enable to outlaw the mergers having Appreciable Adverse Effect on Competition. The companies who misuse the loophole provided in the regimes will now be dealt with strict penalties and fines.
- Shifting of Burden of Proof – ‘Burden of Proof’ will be shifted to parties in the transaction after the successful implementation of the provisions of the bill. Currently the onus of burden is on the Antitrust Agencies and Officials who have to prove beyond reasonable doubt that the particular merger will cause an Appreciable Adverse effect on Competition (AAEC). After amendment, the burden will lie on merging or acquiring entities to prove that the resultant merger will not cause any AAEC.
- Increased liability for Exclusionary Conduct – Apropos the Exclusionary Conduct, the parties are required to furnish proof of not only harm caused to competitors by the dominant player but also the ill impact of it on the relevant market. The new amended provisions will now enable sue dominant players in case it is established that the entity has more than 50% market share or involves a deal worth more than $ 5 Billion.
- New Civil Penalties – The new provisions will empower the Federal Trade Commission and Department of Justice to levy hefty amounts of fines and penalties for alleged anti-competitive conduct by the players. The amount is stipulated at either 15% of annual revenue of the offending party or 30% of the annual revenue of affected parties.
- Elimination of need for determining the relevant market – The bill also reduces the need for providing clear cut details about the relevant market in which the party is held in a dominant position. Earlier to hold guilty for any anti-competitive pact or agreement, the enforcers were required to furnish the details of relevant markets in order to proceed further.
- Creation of Antitrust Lawyer’s Office in FTC – The bill entails the introduction of the office of Antitrust Lawyer in the Federal Trade Commission. This way the FTC will have its own independent lawyer for guiding them on Antitrust Issues and Intricacies surrounding each case.
- Apart from all this, the bill tries to establish the systematic and proper study of the market factors along with the research on reports by FTC and DOJ.
The proposed amendments are not only aimed at targeting Tech Giants but also other players in the market who try to harm Competition Regimes by misusing the loopholes in the legislation. Senator Amy Klobuchar prominently showcases her interest in Antitrust Policies and Regimes. Practically, there is some time in commencement of implementation of the new provisions. The United States is believed to have some of the world’s best Competition Regulations. But as time passed by, the growing emergence of Big Corporations called for stricter regimes that will curtail the illegal conducts by these power-hungry and profit-oriented corporations.
The reason why technology giants are targeted specifically is that they consist of the top most worthy companies across the globe. And because of their sheer size they always somehow come under the vigilant radar of Competition Enforcers. With the already pending cases pertaining to these companies, the new bill would definitely make things more complicated for companies keeping in mind the direction of current circumstances and trends. The democrat Amy Klobucher persistently stated that the Antitrust Enforcers are not against any company or big conglomerates. But to regulate the market forces and healthy economic conditions, the need for enforcers to gear up and act fast has arrived. It will take some time for these changes to be introduced in governing the practical aspect of Antitrust Regulations. Overall the main aim behind the amendment act is to eliminate the concentration of power or control in few hands or in the hands of dominant players. 2021 has just begun and we are yet to see upcoming modification apropos Antitrust Laws from across the globe.
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