“Our antitrust laws have been a problem for decades,” Gianaris said. “This legislation was advised by the State Attorney General’s Office [which] has tried valiantly to use existing laws to bring common sense back to the markets and feels limited by the toothless nature of many of them.
The Gianaris legislation would establish new state pre-merger notification requirements for mergers and significantly lower the pre-merger value threshold from $92 million, the level set by the federal Hart-Scott-Rodino Antitrust Improvement Act. of 1976, at $9.2 million.
“It’s a big change. You’re going to hit a lot of transactions that include New York State, because I would imagine most domestic mergers hit New York State,” said Sam N. Weinstein, professor at the Cardozo School of Law and former antitrust attorney at the Department. of Justice. “It’s going to create a lot of extra work for lawyers, and you’ll have to think twice about it as a business person doing an M&A,” he said, referring to an M&A.
The bill would extend the required notification period for mergers from 30 days, as defined by federal law, to 60 days, which could lead to complex transactions.
Gianaris argued that the large numerical deviations from pre-merger thresholds set by the federal government are deliberate, because he doesn’t want the state to simply duplicate federal regulations.
“That’s the intention. The federal regulator seizes anything above that threshold, and the attorney general’s office believes that small-scale mergers fall through the cracks and that [$9.2 million] would be a good threshold for them to step in and monitor the activity,” he said.
If the bill becomes law, it would make New York the first state to usher in an abuse of dominance standard, like what the European Union uses. Currently, the federal monopoly law uses a market share threshold of 66% to 70% to prove the existence of monopoly power; under the bill, an abuse of dominance standard would be triggered for both buyers and sellers with less than 50% market share, or apply direct evidence of dominant behavior such as fixing prices and wages.
“So alongside monopolization, we would have an antitrust claim for abuse of dominance, which is kind of a broader claim, more based on the types of activities that could cause a company problems,” said Christopher Jon. Sprigman, a law professor at New York University who specializes in intellectual property and antitrust law. “Legislation states that the pro-competitive effects of certain behaviors do not outweigh the anti-competitive effects.”
Hours after the bill passed, the Partnership for the City of New York sent an open letter to Governor Kathy Hochul and state lawmakers attacking the measure. The letter, signed by the presidents, CEOs and legal advisers of more than 50 businesses, corporations and nonprofits, spoke out against the legislation and said it would create “a new level of risk, cost and Potential Liability” for companies doing business in New York.
“If enacted, this law would make New York much less attractive for business investment and job creation because it will impose restrictions on New York businesses that their competitors in other states and most countries would not be. not submitted,” the letter read. “Ultimately, the result of this legislation will be the loss of jobs and reduced tax revenue.”
Presidents and CEOs of chambers of commerce from all five boroughs signed the partnership letter, along with legal experts and business representatives from Condé Nast, Travelers Companies, American Express and Delaware North Companies, the company where the husband of Hochul, William J. Hochul, is General Counsel and Senior Vice President.
“We are aware of the open letter and will follow established recusal policies,” said Hazel Crampton-Hays, Governor Hochul’s press secretary.
Small business advocates hailed the bill and said governments at the state and federal levels should do more to craft legislation that creates more opportunities for small businesses to thrive as the nation emerges from the pandemic.
“The larger problem is that we haven’t had enough antitrust enforcement and it comes at the expense of small businesses,” said Didier Trinh, director of policy at the Main Street Alliance, an advocacy group. national small business headquartered in Washington, D.C. “This bill would allow small businesses to compete more fairly with some of these larger companies.
As the bill moves forward in Albany — Gianaris expects a full Senate vote soon — antitrust experts say the bill could set a new antitrust standard for the rest of the nation to follow.
“The story of the American economy right now is one of big business crushing small,” Sprigman said. “If we had new antitrust laws, big companies would have to be careful, and if you’re small, you’ll have a better chance of surviving and doing it in an increasingly competitive environment.”