COMMENT: Sen. Klobuchar’s Antitrust Proposals are Legally and Economically Misguided
PORLAND, Ore. (Feb. 4, 2021) – This morning, Sen. Amy Klobuchar, D-Minn., the incoming chair of the U.S. Senate Judiciary Committee’s Antitrust Subcommittee, proposed broad changes to U.S. antitrust laws.
Commenting on the proposals, Sam Bowman, director of competition policy at the International Center for Law and Economics (ICLE), said:
“More resources for the FTC and DOJ are welcome, since these agencies need to be able to employ top talent to do their jobs effectively. But much of what is in Senator Klobuchar’s bill is legally and economically misguided. Barring “conduct that materially disadvantages competitors” fundamentally misunderstands what competition does – nearly all business conduct that benefits consumers, like cutting prices or releasing an improved new product, “disadvantages” competitors by forcing them to cut their prices or improve their products to compete. Protecting competitor welfare necessarily means sacrificing competition and the wellbeing of consumers.
“Making it harder for large firms to make acquisitions may hurt startup formation and investment, since being acquired is the main way that venture capital-backed startups can deliver a return to their founders and investors. Analysis of M&A activity in 48 countries concluded that venture capital investment falls when countries pass laws that make takeovers harder, and investment rises when they become easier. There is a serious risk that the effect of Sen Klobuchar’s bill would be to reduce investment in innovative startups and hence reduce innovation in the American economy.
“As well as that, changing the burden of proof to a “guilty until proven innocent” standard would be an unprecedented change in American law that would give enormous discretionary power to Federal agencies, giving them the power to block mergers with zero evidence for doing so.”
If you would like to speak to Sam Bowman you can reach him at [email protected] or (971) 312-8502. You can reach Geoff Manne, president of ICLE, at [email protected] or (503) 780-8515 and Dirk Auer, senior fellow at ICLE, at [email protected] or +32-47-293-8401.
ICLE promotes the use of law & economics methodologies to inform public policy debates. We believe that intellectually rigorous, data-driven analysis will lead to efficient policy solutions that promote consumer welfare and global economic growth.