Democrats in the House of Representatives and the Senate proposed legislation on March 16 to block mergers and acquisitions exceeding $5 billion. The ” Prohibiting Anticompetitive Mergers Act (pdf) could pose a serious problem for the giants of American Tech.
The antitrust law that is shaking Silicon Valley
Elizabeth Warren, the godmother of the law in the Senate does not hide it, if the wording of the text is aimed at all American companies, it is indeed those in the digital sector that are targeted. Nothing surprising for the former candidate for the Democratic primary in 2021 who had made the dismantling of GAFAM the heart of her program.
+24% for the connected watch market in 2021
The “Prohibiting Anticompetitive Mergers Act” proposes to give the means to the Department of Justice and the Federal Trade Commission (FTC), the two American antitrust entities, to block acquisitions beyond 5 billion dollars without going through the courts . Ditto for purchases to obtain a market share exceeding 25% on a market. The text goes even further by prohibiting mergers in the event of a history of non-compliance with antitrust laws.
Mergers could also be reversed retroactively if they led to market shares over 50% in one area, or significant harm to employees, consumers and small businesses.
Facebook’s acquisition of Instagram in 2012, now deemed anti-competitive by the FTC, is on everyone’s mind. More broadly, if the law passed, the takeover of Mandiant by Google, 5.4 billion dollars, would be forgotten, the merger of MGM and Amazon, 8.4 billion dollars, is in the water, the record acquisition from Activision Blizzard by Microsoft, $69 billion, no need to think about it.
Democrats too fragile to pass the law, yet…
The ambition of the Democrats is to limit the possibilities of recourse of the Tech in federal courts. The latter are sometimes perceived as being too accommodating, under the law in force, with large companies. The proliferation of appeals is also an excellent way to limit the effectiveness of antitrust policies by letting decisions drag out over several years. Federal justice could still be seized if an agency acts in a way “ arbitrary or capricious », notes Politico.
7 senators and 11 representatives signed the “Prohibiting Anticompetitive Mergers Act”, including Bernie Sanders and Alexandria Ocasio-Cortez. Politico however, reports the astonishing absence of Amy Klobuchar among the signatories, yet at the forefront of the antitrust fight in the Senate.
Similarly, the absence of a sponsor from the Republican ranks encourages pessimism. The Democratic majority is very fragile in Congress, without support from the childhood camp, the Warren-Jones law has little chance of succeeding in the immediate future. A sigh of relief must blow in the American Tech, but the threat is now concrete.