New York Bill Moving Through Senate Takes on Monopoly Power

Date: 20 May 2021 | posted in: Retail | 0 Facebooktwitterredditmail

A groundbreaking new bill moving through the New York State Senate this week will, if enacted, greatly enhance the ability of the state and private plaintiffs to take on monopoly power and level the playing field for independent businesses in New York.

The bill, first introduced by Sen. Michael Gianaris last September, would usher in much needed reforms to the state’s existing antitrust laws, and will place New York at the forefront of a resurgent local movement to rein in corporate power and create a fair, open marketplace for independent businesses. Given the lax state of antitrust enforcement at the federal level over the past four decades, and the hostility to monopolization cases in the federal courts, this bill would allow the state and private parties to sue abusive, dominant corporations in New York courts as a means of reining in their harmful conduct.

ILSR, along with other Small Business Rising coalition members, supports the proposal and urges New York policymakers to pass the Twenty-First Century Antitrust Act for the immense benefits it would have for small businesses in New York. ILSR Legal Fellow Shaoul Sussman testified in favor of the bill during a Senate hearing in October, alongside ILSR allies and antimonopoly experts Tim Wu, Sally Hubbard, Harry First and others. Now, the bill has been amended and is quickly moving through the Senate, with hopes of passage this legislative year.

The bill would amend the state antitrust law in several important ways. Among them:

  • Allows lawsuits against corporations that act unilaterally to stifle competition. The bill would allow the state attorney general, as well as individuals and private businesses, to sue powerful corporations for monopolizing markets and abusing their dominant positions. Under the current law, the state can only punish conspiracies between multiple companies.
  • Allows the state and other plaintiffs to use evidence of harm to prove a corporation’s dominance. Under the proposed law, the attorney general and private litigants will be able to use direct evidence of power in an industry — including the ability to set prices, and to dictate terms to workers or suppliers — to demonstrate a company’s dominant position without having to pay expensive economists to define a market or establish market shares. When proving market shares becomes necessary, the bill establishes bright-line rules for which companies are considered dominant — exposing corporations that control more than 40 percent of a market for products they sell, and more than 30 percent of a product they buy, to more assertive monopoly enforcement. These bright-line rules serve as a model for state- and federal-level legislation to strengthen antimonopoly enforcement and to create more economic equity for small businesses.
  • Directs the attorney general to establish clear rules prohibiting abusive and anti-competitive tactics by dominant corporations. Independent businesses in New York would enjoy significant new protections from the abusive, often predatory behavior of dominant companies. The bill would direct the attorney general to take on dominant corporations that abuse their power through various kinds of exclusionary conduct, including by leveraging monopoly in one industry to expand its control in other markets, and by refusing to deal with rivals in order to harm competition and shut them out of the market. With clear “rules of the road” on what conduct is and isn’t illegal, small businesses will have a clear understanding of what’s legal and what isn’t — and when to pursue charges to stop monopoly abuses without having to rely on expensive lawyers or confusing standards in court.
  • Allows those harmed by anticompetitive conduct to sue as a class. Small businesses and consumers would also gain the ability to band together in class action lawsuits in order to sue dominant firms for engaging in abusive conduct. Class actions are only allowed in New York if the law explicitly allows them; the current antitrust law, known as the Donnelly Act, makes no mention of class actions. The new law would allow those harmed by anticompetitive conduct to sue as a class and, if successful, collect triple the amount of damages.
  • Protects workers from outsized labor market power. The bill would usher in vast new protections for working people in New York. For example, the bill would effectively stop the use of non-compete and no-poach clauses in employee contracts by exposing any company that uses such clauses to abuse-of-dominance enforcement. The bill also makes clear that powerful companies whose actions hurt workers and suppliers — not just consumers — will face antitrust enforcement action and liability.

Read the bill here.

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Ron Knox

Ron Knox is the Senior Researcher and Writer for ILSR's Independent Business Initiative.