Large Online Platforms Face Increased Antitrust Pressure at Home and Abroad
In February, Senator Amy Klobuchar (D-MN) introduced a new bill to strengthen prohibitions on anti-competitive conduct and mergers. This may mark the dawn of a new chapter in antitrust enforcement against global tech companies.
Senator Amy Klobuchar introduces a new bill to shore up antitrust enforcement. Photo: Sarah Silbiger, Bloomberg News.
By: Daniel Chan, Staff Member
On February 4, 2021, Senator Amy Klobuchar (D-MN), the top Democrat on the Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, introduced the Competition and Antitrust Law Enforcement Reform Act of 2021 (CALERA).
The bill aims to strengthen prohibitions against anticompetitive conduct and mergers, overruling some previous “flawed court decisions [that] have weakened the effectiveness of Section 2 of the Sherman Antitrust Act to prevent anticompetitive conduct by dominant companies.” The bill received some preliminary support from Senator Mike Lee (R-UT), the leading Republican on the Senate Judiciary Committee's Antitrust Subcommittee, who echoed concerns about dangers posed by “Big Tech” and the need to improve antitrust enforcement in this area.
This bill was introduced not long after the Judiciary Antitrust Subcommittee’s “Investigation of Competition in the Digital Marketplace” report was published. The report was a culmination of a sixteen months-long investigation into the state of competition in the digital economy and cautioned against ongoing dominance by large online platforms, such as Apple, Amazon, Google, and Facebook. Many of the recommendations in the report, including those concerning acquisitions and exclusive conduct, found their way into the new bill.
Two Key CALERA Provisions
While CALERA introduces sweeping reforms of many areas of antitrust law and enforcement, two of the most noteworthy changes that would affect large online platforms remove some common law defenses currently available to corporations, and in many cases shift the burden of proof.
First, the proposed bill creates a presumption of illegality in mergers valued at greater than $5 billion, or involving acquirers with assets, net revenue, or market capitalization greater than $100 billion. This is a direct answer to the growing theory of “nascent competition” and “killer acquisitions” in the field of antitrust, where internet giants, such as Google and Facebook, have been accused of buying up start-up companies before they could pose any meaningful competitive threat against their core business.
The standard for merger challenges has also been lowered from requiring plaintiffs to prove that an acquisition’s effect “may be substantially to lessen competition,” to requiring only that the mergers “create an appreciable risk of materially lessening competition.”
Another significant proposal is the introduction of a new cause of action: “exclusionary conduct” under the Clayton Act. This is defined as acts that either materially disadvantages one or more actual potential competitors, or tends to foreclose or limit the opportunity of one or more actual or potential competitors to compete. More importantly, if the alleged action is taken by a firm that has more than 50% market share as either a seller or a buyer or “otherwise has significant market power,” the burden of proof will again shift to the defendant to demonstrate that its actions were not anti-competitive. Many existing common law defenses to exclusionary conduct have also been explicitly overruled in this proposed bill.
If passed into law, both provisions would significantly impact any future M&A activities and internal policies of the large internet platforms mentioned above. Additionally, because U.S. antitrust policy is often reflected in many other jurisdictions around the globe, this bill may mark a turning point in the competitive landscape of the global online platform market.
Global Antitrust Enforcement Against Online Platforms
Amazon, Facebook, and Google also face pressure from antitrust enforcement agencies in several other countries. On November 10, 2020, Amazon was charged with abuse of dominant power under EU competition law. On January 8, 2021, the UK’s competition agency opened a formal investigation into Google for its recent privacy changes in Chrome, Google’s flagship web browser. On February 24, 2021, Australia passed legislation requiring internet companies to pay news subscribers for showing their content online, following a controversial move from Facebook to block all Australian news from its platform. Senator Klobuchar’s new bill CALERA is yet another antitrust development in the global arena for regulating online platforms.
The numerous antitrust complaints raised against these large online platforms vary by jurisdiction, but one thing is clear: the amount of power wielded by global online platforms in all aspects of our lives is immense, and equally troubling to antitrust enforcement agencies worldwide.
Whether CALERA will be able to gain bipartisan support and what a bipartisan CALERA might actually look like are questions worth following, as their answers will greatly impact the momentum of antitrust regulation of large online platforms around the globe.
Daniel Chan is an L.L.M. student at Columbia Law School and a Staff member of the Columbia Journal of Transnational Law. He graduated from Sciences Po in 2019 and is working in the fields of antitrust and international commercial arbitration.