Today, the Partnership for New York City submitted the following testimony to the New York State Senate Standing Committee on Consumer Protection.
Testimony as prepared for Kathryn Wylde, President and CEO of the Partnership for New York City.
Thank you, Chair Thomas and Deputy Leader Gianaris, for the opportunity to testify on the 21st Century Antitrust Act.
The Partnership for New York City represents private-sector employers of more than 1.5 million New Yorkers. We work with government, labor, and the nonprofit sector to maintain the city’s position as the preeminent global center of commerce, innovation, and economic opportunity.
The 21st Century Antitrust Act would be a substantial departure from U.S. antitrust law and practice. There is certainly a case to be made that states should be able to challenge monopolistic practices in the interests of business competition and consumer choice. But New York’s Attoney General already has that ability under existing law. We are concerned that the proposed legislation could be counter to the best interests of the state at a time New York is struggling to recover from enormous fiscal and economic damage. As a result of COVID-19, the state has lost more than 1.1 million jobs and is facing loss of many businesses as the economic crisis is still unfolding.
With respect to specific objections to the provisions of the bill, the following are our primary concerns:
- The proposed “abuse of dominance” standard is overbroad and could discourage early stage and high growth businesses from locating here, mainly if they deem themselves potential “category killers.” The European standard of abuse of dominance differs from U.S. understanding of what constitutes a monopoly, in that European firms with market shares as low as 30% face liability for allegedly abusing their position. This standard would expose almost any successful company to charges of abuse of dominance, including just offering discounted prices to consumers to gain market share, a practice that is fairly universal in American business. If New York state were to adopt such a standard, it could threaten the continued growth of innovation economy jobs here with both large and small employers.
- Of even greater concern is that the bill would include a private right of action, which would allow individual or class actions to be brought on the basis of a standard of abuse of dominance for which there is no legal precedent in the U.S. This creates a new and significant level of risk that could discourage business investment in New York. Of course, businesses forced to defend against actions brought under this law would also face new cost and compliance issues that seem contrary to our pandemic recovery goals.
- The New York Attorney General already has the authority to bring actions under Section 2 of the Sherman Act — the principal federal law under which monopolies can be challenged. While the proposed act would give more latitude, we question whether it is worth the economic damage that could result if it discourages companies from locating operations here, especially since it is unclear exactly what conduct is meant to be made illegal under the proposed law that is not already illegal under existing federal standards.
- Diverging so fundamentally from U.S. antitrust law would put a substantial new burden on the New York state court system at a time when our commercial courts are already over-extended. It would introduce a complex legal standard that does not exist anywhere else in the country and challenge decades of U.S. case law. While the state Attorney General has enforcement powers, the regulatory infrastructure to manage antitrust issues has been the exclusive province of a large antitrust bureaucracy in Washington. New York is not in a position to replicate that bureaucracy or the bureaucratic structure responsible for overseeing the European Union standards that this proposed law seeks to mimic.
- New York state judges are also likely to be thrust into the role of rate regulators, tasked with determining whether a firm’s pricing is “too high” or “too low” — a role that generalist judges are ill-equipped to handle, and will have enormous repercussions for the state’s economy.
- Finally, the legislation treats violations criminally rather than civilly, which would be a radical departure from current law and send a chilling message to job creators.
The Partnership appreciates the thoughtful approach being taken with such wide-reaching legislation and welcomes the opportunity to further work with the Legislature on this and the economic needs for New York.