The “twenty-first century Antitrust Act” raises the risks of doing business in New York
Click here to read the full article onlineThe New York state Senate has passed the “Twenty-First Century Antitrust Act” (S. 933) to amend its state antitrust law, radically changing the risks of doing business in New York. It ostensibly aims at so-called “Big Tech,” but applies to all businesses, even those having very little contact with New York. If enacted by the Assembly and signed into law by the Governor, the bill would have three primary implications: 1. The bill requires merger filings in New York 60 days before closing for a huge number of relatively small deals with little connection to New York—covering many more deals than are currently filed with the federal agencies under HSR. This may require major changes in how businesses track and report deals. 2. The bill adopts European-style “abuse of dominance” limits for conduct that US law has been more likely to view as aggressive, beneficial competition. It then goes further than European competition law by presuming firms with more than a 40% share are dominant, eliminating any defense that conduct had procompetitive effects, and applying special stricter provisions in labor markets. Antitrust enforcers often define very narrow markets—such as “entry-level on-premises sparkling wine”—so even smaller businesses might be surprised to find themselves deemed “dominant.” Businesses could thus find routine practices such as minimum volume commitments or bundled pricing have become illegal, and will be barred from raising basic defenses. The bill also allows the NY Attorney General to make rules to define practices as abuses of dominance. The bill also allows private individual and class actions with treble damages. These provisions may well render routine business practices illegal or impracticably risky even when the practices were procompetitive—the opposite of the bill’s intent. 3. The bill prohibits monopolization, not previously covered by the Donnelly Act, and makes it a possible criminal offense (as well as allowing private claims). The federal government has for many decades declined to bring criminal monopolization cases. While New York will hopefully follow that established, bipartisan principle, if it doesn’t, businesses could be at risk of criminal penalties for conduct that might not be obviously illegal, or that might have seemed perfectly lawful and commonplace. Some indications during the legislative process unfortunately suggest that New York may well intend to make use of this new criminal monopolization authority.