Open Markets Applauds Principles of Antitrust Subcommittee Chairman Cicilline’s Proposed Merger Moratorium
April 23, 2020
Washington, DC – House Antitrust Subcommittee Chairman David Cicilline (D-RI) proposed legislation today for halting harmful mergers to protect the American economy, during the Shock Proof conference hosted by Open Markets and the OECD. Open Markets applauds the principles of the proposed moratorium on mergers and acquisitions by large firms not on the brink of failing.
Specifically, the chairman’s plan calls for a moratorium on mergers until the end of the pandemic, allowing transactions only if a company is in bankruptcy or otherwise failing. The policy, Cicilline says, would prevent big companies and investors from taking advantage of the plummeting economy and wiping out competition.
During the conference, the chairman said, “As millions of businesses struggle to stay afloat, private equity firms and dominant corporations are positioned to swoop in for a buying spree. This is not complicated. Our country can leave room for merger activity that is necessary to ensuring that distressed firms have a fresh start through the bankruptcy process or through necessary divestitures while also ensuring that we do not undergo another period of rampant consolidation.”
In March, Open Markets similarly called on Congress, the Trump administration, and federal and state law enforcement agencies to “use their various powers to impose an immediate ban on all mergers and acquisitions by any corporation with more than $100 million in annual revenue, and by any financial institution or equity fund with more than $100 million in capitalization.” Open Markets wrote then that a moratorium on mergers is needed to prevent a wholesale concentration of additional power by corporations that already dominate or largely dominate their industries, especially in ways that may significantly worsen the crisis that now threatens America’s health, social, and economic systems.
Without a merger ban, Americans will face even greater concentration and increased economic and political inequality after the pandemic. While most independent businesses are facing hardship, corporations such as Apple have plenty of available cash and are ready to use it immediately for takeovers.
“The principles of the chairman’s proposed plan are imperative to the recovery of the economy,” said Sandeep Vaheesan, legal director of Open Markets Institute. “Financially, independent businesses are having a tough time right now. We need swift government intervention to protect them not only through the duration of the crisis, but well into the recovery phase. Chairman Cicilline’s proposed plan would not only save independent business, but stem future concentration – and we need other officials to get on board with it.”
Rep. Cicilline also called for a legislative ban on noncompete clauses that bind tens millions of workers. He said that a ban is essential for ensuring that Americans who have lost their jobs due to the pandemic (nearly 27 million over the past five weeks) can find work once the crisis ends. The Open Markets Institute, as part of a broad labor and public interest coalition, petitioned the Federal Trade Commission in March 2019 to ban noncompetes for all workers.