Consolidation Prevention and Competition Promotion Act of 2021
Bill: S.3267 | Sponsor: Sen. Klobuchar, Amy (D-MN)
Policy area: Commerce

Summary:
Consolidation Prevention and Competition Promotion Act of 2021
This bill revises antitrust laws applicable to mergers and anticompetitive conduct.
Specifically, the bill applies a stricter standard for permissible mergers by prohibiting mergers that (1) create an appreciable risk of materially lessening competition, or (2) unfairly lower the prices of goods or wages because of a lack of competition among buyers or employers (i.e., a monopsony). Under current law, mergers that substantially lessen competition are prohibited.
Additionally, for some large mergers or mergers that concentrate markets beyond a certain threshold, the bill shifts the burden of proof to the merging parties to prove that the merger does not violate the law.
The bill also establishes within the Federal Trade Commission (FTC) the Office of the Competition Advocate.
The Government Accountability Office must report on (1) the success of merger remedies required by the Department of Justice or the FTC in recent consent decrees; and (2) the impact of mergers and acquisitions on wages, employment, innovation, and new business formation.

To reform the antitrust laws to better protect competition in the 
 American economy, to amend the Clayton Act to modify the standard for 
                        an unlawful acquisition.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consolidation Prevention and 
Competition Promotion Act of 2021''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) competitive markets, in which multiple firms compete to 
        buy and sell products and services, are critical to ensuring 
        economic opportunity for all people in the United States and 
        providing resilience to the economy during unpredictable times;
            (2) when companies compete, businesses offer the highest 
        quality and choice of goods and services for the lowest 
        possible prices to consumers and other businesses;
            (3) competition fosters small business growth, reduces 
        economic inequality, and spurs innovation and job creation;
            (4) in the United States economy today, the presence and 
        exercise of market power is substantial and growing;
            (5) the presence and exercise of market power makes it more 
        difficult for people in the United States to start their own 
        businesses, depresses wages, and increases economic inequality, 
        with particularly damaging effects on historically 
        disadvantaged communities;
            (6) market power and undue market concentration contribute 
        to the consolidation of political power, undermining the health 
        of democracy in the United States;
            (7) the anticompetitive effects of monopoly power or buyer 
        market power include higher prices, lower quality, lessened 
        choice, reduced innovation, foreclosure of competitors, and 
        increased entry barriers;
            (8) monopsony power or seller market power allows a firm to 
        force suppliers of goods or services to accept below market 
        prices or to force workers to accept below market wages, 
        resulting in lower quality products and services, reduced 
        opportunities for suppliers and workers, reduced availability 
        of products and services for consumers, reduced innovation, 
        foreclosure of competitors, and increased entry barriers;
            (9) horizontal consolidation, vertical consolidation, and 
        conglomerate mergers all have potential to increase market 
        power and cause anticompetitive harm;
            (10) extensive consolidation is reducing competition and 
        threatens to place the American dream further out of reach for 
        many consumers in the United States;
            (11) since 2008, firms in the United States have engaged in 
        over $10,000,000,000,000 in mergers and acquisitions;
            (12) the acquisition of nascent or potential rivals by 
        dominant firms can present significant long-term threats to 
        competition and innovation;
            (13) the acquisition, by one of its competitors, of a 
        maverick firm that plays a disruptive role in the market--by 
        using an innovative business model or technology, offering 
        lower prices or new, different products or services products, 
        or by other means that benefit consumers--can present a threat 
        to competition;
            (14) section 7 of the Clayton Act (15 U.S.C. 18), is the 
        primary line of defense against anticompetitive mergers; and
            (15) in recent years, some court decisions and enforcement 
        policies have limited the vitality of the Clayton Act to 
        prevent harmful consolidation by--
                    (A) discounting previously accepted presumptions 
                that certain acquisitions are anticompetitive;
                    (B) focusing inordinately on the effect of an 
                acquisition on price in the short term, to the 
                exclusion of other potential anticompetitive effects;
                    (C) underestimating the dangers that horizontal, 
                vertical, and conglomerate mergers will lower quality, 
                reduce choice, impede innovation, exclude competitors, 
                increase entry barriers, or create buyer power, 
                including monopsony power; and
                    (D) requiring the government to prove harmful 
                effects of a proposed merger to a near certainty.
    (b) Purposes.--The purposes of this Act are to--
            (1) enhance competition throughout the American economy by 
        strengthening antitrust enforcement by the Department of 
        Justice, the Federal Trade Commission, the State enforcement 
        agencies, and private parties;
            (2) revise the legal standard under section 7 of the 
        Clayton Act to better enable enforcers to arrest the likely 
        anticompetitive effects of harmful mergers in their incipiency, 
        as Congress intended, by clarifying that the potential effects 
        that may justify prohibiting a merger under the Clayton Act 
        include lower quality, reduced choice, reduced innovation, the 
        exclusion of competitors, or increased entry barriers, in 
        addition to increased price to buyers or reduced price to 
        sellers;
            (3) amend the Clayton Act to clarify that an acquisition 
        that tends to create a monopsony violates the Clayton Act; and
            (4) establish simple, cost-effective decision rules that 
        require the parties to certain acquisitions that either 
        significantly increase concentration or are extremely large 
        bear the burden of establishing that the acquisition will not 
        materially harm competition.

SEC. 3. DEFINITION.

    In this Act the term ``antitrust laws''--
            (1) has the meaning given the term in the first section of 
        the Clayton Act (15 U.S.C. 12); and
            (2) includes--
                    (A) section 5 of the Federal Trade Commission Act 
                (15 U.S.C. 45) to the extent that such section applies 
                to unfair methods of competition; and
                    (B) this Act and the amendments made by this Act.

SEC. 4. UNLAWFUL ACQUISITIONS.

    (a) Market Power.--Section 1(a) of the Clayton Act (15 U.S.C. 
12(a)) is amended by adding at the end the following:
            ``the term `market power' in this Act means the ability of 
        a person, or a group of persons acting in concert, to 
        profitably impose terms or conditions on counterparties, 
        including terms regarding price, quantity, product or service 
        quality, or other terms affecting the value of consideration 
        exchanged in the transaction, that are more favorable to the 
        person or group of persons imposing them than what the person 
        or group of persons could obtain in a competitive market.''.
    (b) Unlawful Acquisitions.--Section 7 of the Clayton Act (15 U.S.C. 
18) is amended--
            (1) in the first and second undesignated paragraphs, by 
        striking ``substantially to lessen'' each place that term 
        appears and inserting ``to create an appreciable risk of 
        materially lessening'';
            (2) by inserting ``or a monopsony'' after ``monopoly'' each 
        place that term appears; and
            (3) by adding at the end the following:
    ``In a case brought by the United States, the Federal Trade 
Commission, or a State attorney general, a court shall determine that 
the effect of an acquisition described in this section may be to create 
an appreciable risk of materially lessening competition or to tend to 
create a monopoly or a monopsony, in or affecting commerce, if--
            ``(1) the acquisition would lead to a significant increase 
        in market concentration in any relevant market;
            ``(2)(A) the acquiring person has a market share of greater 
        than 50 percent or otherwise has significant market power, as a 
        seller or a buyer, in any relevant market, and as a result of 
        the acquisition, the acquiring person would obtain control over 
        entities or assets that compete or have a reasonable 
        probability of competing with the acquiring person in the same 
        relevant market; or
            ``(B) as a result of the acquisition, the acquiring person 
        would obtain control over entities or assets that have a market 
        share of greater than 50 percent or otherwise have significant 
        market power, as a seller or a buyer, in any relevant market, 
        and the acquiring person competes or has a reasonable 
        probability of competing with the entities or assets over which 
        it would obtain control, as result of the acquisition, in the 
        same relevant market;
            ``(3) the acquisition would lead to the combination of 
        entities or assets that compete or have a reasonable 
        probability of competing in a relevant market, and either the 
        acquiring person or the entities or assets over which it would 
        obtain control prevents, limits, or disrupts coordinated 
        interaction among competitors in a relevant market or has a 
        reasonable probability of doing so;
            ``(4) the acquisition--
                    ``(A) would likely enable the acquiring person to 
                unilaterally and profitably exercise market power or 
                materially increase its ability to do so; or
                    ``(B) would materially increase the probability of 
                coordinated interaction among competitors in any 
                relevant market; or
            ``(5)(A) the acquisition is not a transaction that is 
        described in section 7A(c); and
            ``(B)(i) as a result of such acquisition, the acquiring 
        person would hold an aggregate total amount of the voting 
        securities and assets of the acquired person in excess of 
        $5,000,000,000 (as adjusted and published for each fiscal year 
        beginning after September 30, 2022, in the same manner as 
        provided in section 8(a)(5) to reflect the percentage change in 
        the gross national product for such fiscal year compared to the 
        gross national product for the year ending September 30, 2021); 
        or
            ``(ii)(I) the person acquiring or the person being acquired 
        has assets, net annual sales, or a market capitalization 
        greater than $100,000,000,000 (as so adjusted and published); 
        and
            ``(II) as a result of such acquisition, the acquiring 
        person would hold an aggregate total amount of the voting 
        securities and assets of the acquired person in excess of 
        $50,000,000 (as so adjusted and published),
        unless the acquiring or acquired person establish, by a 
        preponderance of the evidence, that the effect of the 
        acquisition will not be to create an appreciable risk of 
        materially lessening competition or tend to create a monopoly 
        or a monopsony. In this paragraph, the term `materially' means 
        more than a de minimis amount.''.

SEC. 5. POST-SETTLEMENT DATA.

    Section 7A of the Clayton Act (15 U.S.C. 18a) is amended by adding 
at the end the following:
    ``(l)(1) Each person who enters into an agreement with the Federal 
Trade Commission or the United States to resolve a proceeding brought 
under the antitrust laws or under the Federal Trade Commission Act (15 
U.S.C. 41 et seq.) regarding an acquisition with respect to which 
notification is required under this section shall, on an annual basis 
during the 5-year period beginning on the date on which the agreement 
is entered into, submit to the Federal Trade Commission or the 
Assistant Attorney General, as applicable, information sufficient for 
the Federal Trade Commission or the United States, as applicable, to 
assess the competitive impact of the acquisition, including--
            ``(A) the pricing, availability, and quality of any product 
        or service, or inputs thereto, in any market, that was covered 
        by the agreement;
            ``(B) the source, and the resulting magnitude and extent, 
        of any cost-saving efficiencies or any benefits to consumers or 
        trading partners that were claimed as a benefit of the 
        acquisition and the extent to which any cost savings were 
        passed on to consumers or trading partners; and
            ``(C) the effectiveness of any divestitures or any 
        conditions placed on the acquisition in fully restoring 
        competition.
    ``(2) The requirement to provide the information described in 
paragraph (1) shall be included in an agreement described in that 
paragraph.
    ``(3) The Federal Trade Commission, with the concurrence of the 
Assistant Attorney General, by rule in accordance with section 553 of 
title 5, United States Code, and consistent with the purposes of this 
section--
            ``(A) shall require that the information described in 
        paragraph (1) be in such form and contain such documentary 
        material and information relevant to an acquisition as is 
        necessary and appropriate to enable the Federal Trade 
        Commission and the Assistant Attorney General to assess the 
        competitive impact of the acquisition under paragraph (1); and
            ``(B) may--
                    ``(i) define the terms used in this subsection;
                    ``(ii) exempt, from the requirements of this 
                section, information not relevant in assessing the 
                competitive impact of the acquisition under paragraph 
                (1); and
                    ``(iii) prescribe such other rules as may be 
                necessary and appropriate to carry out the purposes of 
                this section.''.

SEC. 6. FEDERAL TRADE COMMISSION STUDY.

    Not later than 2 years after the date of enactment of this Act, the 
Federal Trade Commission, in consultation with the Securities and 
Exchange Commission, shall conduct and publish a study, using any 
compulsory process necessary, relying on public data and information if 
available and sufficient, and incorporating public comment on--
            (1) the extent to which an institutional investor or 
        related institutional investors have ownership or control 
        interests in competitors in moderately concentrated or 
        concentrated markets;
            (2) the economic impacts of such overlapping ownership or 
        control; and
            (3) the mechanisms by which an institutional investor could 
        affect competition among the companies in which it invests and 
        whether such mechanisms are prevalent.

SEC. 7. GAO STUDIES.

    (a) In General.--Not later than 18 months after the date of 
enactment of this Act, the Comptroller General of the United States 
shall--
            (1) conduct a study to assess the success of merger 
        remedies required by the Department of Justice or the Federal 
        Trade Commission in consent decrees entered into since 6 years 
        prior to the date of enactment of this Act, including the 
        impact on maintaining competition, a comparison of structural 
        and conduct remedies, and the viability of divested assets; and
            (2) conduct a study on the impact of mergers and 
        acquisitions on wages, employment, innovation, and new business 
        formation.
    (b) Update.--The Comptroller General of the United States shall--
            (1) update the study under paragraph (1) 3 years and 6 
        years after the date of enactment of this Act based on the 
        information provided under section 7A(l) of the Clayton Act, as 
        added by section 5 of this Act; and
            (2) identify specific remedies or alleged merger benefits 
        that require additional information or research.

SEC. 8. OFFICE OF COMPETITION ADVOCATE.

    (a) Definitions.--In this section--
            (1) the term ``agency'' has the meaning given the term in 
        section 551 of title 5, United States Code;
            (2) the term ``covered company'' means any company that 
        has, at any time, been required to make a filing under section 
        7A of the Clayton Act (15 U.S.C. 18a);
            (3) the term ``Office'' means the Office of the Competition 
        Advocate established under subsection (b);
            (4) the term ``Chairman'' means the Chairman of the 
        Commission; and
            (5) the term ``Commission'' means the Federal Trade 
        Commission.
    (b) Establishment.--There is established within the Federal Trade 
Commission the Office of the Competition Advocate.
    (c) Competition Advocate.--
            (1) In general.--The head of the Office shall be the 
        Competition Advocate, who shall--
                    (A) report directly to the Chairman; and
                    (B) be appointed by the Chairman, with the 
                concurrence of a majority of the Commission, including 
                at least 1 Commissioner who is not a member of the same 
                political party of the majority members of the 
                Commission, from among individuals having experience in 
                advocating for the promotion of competition.
            (2) Compensation.--The annual rate of pay for the 
        Competition Advocate shall be equal to the highest rate of 
        annual pay for other senior executives who report to the 
        Chairman of the Commission.
            (3) Limitation on service.--An individual who serves as the 
        Competition Advocate may not be employed by the Commission--
                    (A) during the 2-year period ending on the date of 
                appointment as Competition Advocate; or
                    (B) during the 5-year period beginning on the date 
                on which the person ceases to serve as the Competition 
                Advocate.
    (d) Staff of Office.--The Competition Advocate, after consultation 
with the Chairman of the Commission, shall retain or employ independent 
counsel, research staff, and service staff, as the Competition Advocate 
determines is necessary to carry out the functions, powers, and duties 
of the Office.
    (e) Duties and Powers.--The Competition Advocate shall--
            (1) recommend processes or procedures that will allow the 
        Federal Trade Commission and the Antitrust Division of the 
        Department of Justice to improve the ability of each agency to 
        solicit reports from consumers, small businesses, and employees 
        about possible anticompetitive practices or adverse effects of 
        concentration;
            (2) publicly provide recommendations to other Federal 
        agencies about administrative actions that may have 
        anticompetitive effects and the potential harm to competition 
        if those actions are carried out;
            (3) provide recommendations to other Federal agencies about 
        administrative actions that may have procompetitive effects and 
        the potential benefit to competition if those actions are 
        carried out;
            (4) publish periodic reports on--
                    (A) market competition and its impact on the United 
                States, local geographic areas, and different 
                demographic and socioeconomic groups; and
                    (B) the success of remedies required by the 
                Department of Justice or the Federal Trade Commission 
                in consent decrees;
            (5) collect data regarding concentration levels across 
        industries and the impact and degree of antitrust enforcement; 
        and
            (6) standardize the types and formats of data reported and 
        collected.
    (f) Subpoena Authority.--
            (1) In general.--The Competition Advocate may either 
        require the submission of or accept voluntary submissions of 
        periodic and other reports from any covered company for the 
        purpose of assessing competition and its impact on the United 
        States, local geographic areas, and different demographic and 
        socioeconomic groups.
            (2) Written finding.--Before issuing a subpoena to collect 
        the information described in paragraph (1), the Competition 
        Advocate shall make a written finding that--
                    (A) the data is required to carry out the functions 
                of the Competition Advocate; and
                    (B) the information is not available from a public 
                source or another agency.
            (3) Mitigation of report burden.--Before requiring the 
        submission of a report from any company required to make a 
        filing under section 7A of the Clayton Act (15 U.S.C. 18a), the 
        Competition Advocate shall--
                    (A) coordinate with other agencies or authority; 
                and
                    (B) whenever possible, rely on information 
                available from such agencies or authority.
    (g) Data Center.--
            (1) Establishment.--There is established within the Office 
        the Data Center.
            (2) Duties.--The Data Center shall--
                    (A) collect, validate, and maintain data obtained 
                from agencies, as defined in section 551 of title 5, 
                United States Code, commercial data providers, publicly 
                available data sources, and any covered company; and
                    (B) prepare and publish, in a manner that is easily 
                accessible to the public--
                            (i) a concentration database;
                            (ii) a merger enforcement database;
                            (iii) any other database that the 
                        Competition Advocate determines is necessary to 
                        carry out the duties of the Office; and
                            (iv) the format and standards for Office 
                        data, including standards for reporting 
                        financial transaction and position data to the 
                        Office.
            (3) Regulations.--The Competition Advocate shall promulgate 
        regulations relating to the collection and standardizing of 
        data under paragraph (2).
            (4) Confidentiality.--
                    (A) In general.--The Data Center may not disclose 
                any confidential data collected under paragraph (2).
                    (B) Requirements.--Data obtained from an agency 
                shall be subject to the same confidentiality 
                requirements and protection as the agency providing the 
                data.
                    (C) Information security.--The Competition Advocate 
                shall ensure that data collected and maintained by the 
                Data Center are kept secure and protected against 
                unauthorized disclosure.
    (h) Division of Market Analysis.--
            (1) Establishment.--There is established within the Office 
        the Division of Market Analysis.
            (2) Leadership.--The head of the Division of Market 
        Analysis shall be the Director of Market Analysis, who shall--
                    (A) report directly to the Competition Advocate; 
                and
                    (B) be appointed by the Competition Advocate, with 
                the concurrence of a majority of the Commission, 
                including at least one Commissioner who is not a member 
                of the same political party of the majority members of 
                the Commission.
            (3) Division staff.--The Division of Market Analysis shall 
        retain or employ independent legal, economic, research, and 
        service staff sufficient to carry out the functions, powers, 
        and duties of the Division.
            (4) Duties and powers.--The Division of Market Analysis--
                    (A) shall, at the direction of the Competition 
                Advocate or the Commission, conduct investigations of 
                markets or industry sectors to analyze the competitive 
                conditions and dynamics affecting such markets or 
                industry sectors, including the effects that market 
                concentration, mergers and acquisitions, certain types 
                of agreements, and other forms of business conduct have 
                on competition, consumers, workers and innovation, and 
                shall publish reports on the results of such 
                investigations;
                    (B) shall, at the direction of the Competition 
                Advocate or the Commission, conduct investigations 
                concerning the competitive effects of acquisitions that 
                have been consummated no less than 2 years prior to the 
                start of the investigation, which shall include 
                recommendations concerning appropriate enforcement 
                action to remedy any anticompetitive effects discovered 
                and may include assessments of--
                            (i) the conditions of the relevant markets 
                        affected by the acquisition, over the period 
                        since the acquisition was consummated, 
                        including, but not limited to, the potential 
                        impact that the acquisition has had on--
                                    (I) the prices of goods or 
                                services, including wages in any 
                                affected labor markets;
                                    (II) the output and quality of 
                                goods and services;
                                    (III) the entry or exit of 
                                competitors;
                                    (IV) innovation;
                                    (V) consumer choice and product 
                                variety;
                                    (VI) the opportunity of suppliers 
                                and works to sell their product or 
                                services;
                                    (VII) coordinated interaction 
                                between competitors; and
                                    (VIII) subsequent mergers and 
                                acquisitions activity;
                            (ii) whether the acquiring person or its 
                        successors in interest--
                                    (I) complied with all obligations 
                                under any agreement with the Federal 
                                Trade Commission, the United States, or 
                                State law enforcement authorities to 
                                resolve a proceeding brought under the 
                                antitrust laws; and
                                    (II) achieved measurable, 
                                transaction-specific efficiencies, 
                                which did not arise from 
                                anticompetitive reductions of output, 
                                as a result of the acquisition; and
                            (iii) whether any agreements with the 
                        Federal Trade Commission or the United States 
                        to resolve a proceeding brought under the 
                        antitrust laws regarding the acquisition was 
                        effective in mitigating the anticompetitive 
                        effects from the acquisition;
                    (C) shall rely on public data and information, 
                public comment, information from other Federal 
                agencies, information from the Data Center, information 
                obtained pursuant to the Competition Advocate's 
                subpoena authority under subsection (f) of this section 
                and may use compulsory process under section 6(b) of 
                the Federal Trade Commission Act (15 U.S.C. 46(b)) as 
                necessary to carry out the functions set forth in 
                subsections (h)(3)(A) and (h)(3)(B) of this section; 
                and
                    (D) shall report any evidence it obtains that any 
                person, partnership, or corporation has engaged in 
                transactions or conduct that may constitute of a 
                violation of the antitrust law to the Commission, which 
                may institute further investigation, initiate 
                enforcement proceedings, or refer such evidence to the 
                Attorney General.

SEC. 9. MARKET DEFINITION.

    (a) In General.--Establishing liability under the antitrust laws 
does not require the definition of a relevant market, except when the 
definition of a relevant market is required, to establish a presumption 
or to resolve a claim, under a statutory provision that explicitly 
references the terms ``relevant market'', ``market concentration'', or 
``market share''. Statutory references to the term ``line of commerce'' 
shall not constitute an exception to the foregoing rule that 
establishing liability under the antitrust laws does not require the 
definition of a relevant market.
    (b) Direct Evidence.--If direct evidence in the record is 
sufficient to prove actual or likely harm to competition, an 
appreciable risk to competition sufficient to satisfy the applicable 
statutory standard, or that the effect of an acquisition subject to 
section 7 of the Clayton Act (15 U.S.C. 18) may be to create an 
appreciable risk of materially lessening competition or to tend to 
create a monopoly or a monopsony, neither a court nor the Federal Trade 
Commission shall require definition of a relevant market in order to 
evaluate the evidence, to find liability, or to find that a claim has 
been stated under the antitrust laws.
    (c) Rule of Construction.--Nothing in this section may be construed 
to prevent a court or the Federal Trade Commission from considering 
evidence relating to the definition of proposed relevant markets to 
evaluate the merits of a claim under the antitrust laws.

SEC. 10. ADDITIONAL REMEDIES; RULES OF CONSTRUCTION.

    (a) Additional Remedies.--The rights and remedies provided under 
this Act are in addition to, not in lieu of, any other rights and 
remedies provided by Federal law, including under section 4, 4A, 15, or 
16 of the Clayton Act (15 U.S.C. 15, 15a, 25, 26) or section 13(b) of 
the Federal Trade Commission Act (15 U.S.C. 53(b)).
    (b) Rules of Construction.--Nothing in this Act may be construed 
to--
            (1) impair or limit the applicability of any of the 
        antitrust laws; and
            (2) prohibit any other remedy provided by Federal law.
                                 <all>