ICYMI: Antitrust and State Legislatures: Where are We Headed?
From March 29-31 of this year, antitrust practitioners, government officials, academics, and economists from around the world convened in Washington, DC for the 2023 American Bar Association Antitrust Spring Meeting, where they discussed the latest developments in antitrust law and policy. Closing out the week, CCIA hosted a panel discussion titled “Antitrust and State Legislatures: Where Are We Headed?”. The panel featured Ted Bolema (Antitrust and Competition Fellow at the Innovators Network Foundation), Vic Domen (Partner at Norton Rose Fulbright US LLP), Caleb Williamson (State Public Policy Counsel at ACT | The App Association), and Eric Stock (Partner at Gibson Dunn), with Khara Boender (State Policy Director at CCIA) serving as moderator. The discussion covered current federal and state antitrust efforts, the role of state legislatures in creating and enforcing antitrust laws, and the impact of state antitrust efforts on technology companies and the U.S. economy.
The discussion began with Khara Boender asking for a brief overview of certain antitrust proposals at the federal and state level. AICOA and ACIOA were briefly mentioned, with Ted Bolema noting both pieces of legislation had bipartisan support but then stalled through the year. Boender also questioned the panelists on the passed State Antitrust Enforcement Venue Act, with Vic Domen noting the states “view themselves really on a similar level with the FTC and DOJ.” Domen continued, saying the Venue Act is something the state AGs were waiting for so that their individual cases are not lumped into multidistrict litigation (MDLs) and the AGs have the opportunity to, in a sense, choose their own venues. Eric Stock offered comments on the Venue Act as well, saying the statute “gives state enforcers the ability to control their litigation while still filing in federal court” and noted a silver lining is “now there’s really no good reason for states to file in state court if their case is intended to influence, you know, the national economy.”
The discussion then turned to recent legislative efforts from the states such as California, New York, and Minnesota. Panelists noted the movement from states on both the left and the right to shift antitrust law to accomplish more populist goals and reduce the power of businesses they perceive as “dominant” in some manner or another. Further, panelists noted the perception that such legislation would be difficult to move through Congress and therefore the states were the only way to achieve a more aggressive or interventionist vision of antitrust similar to the EU.
Commenting further on activities by the states, Caleb Williamson explained that:
[S]tates have a history of taking actions on issues that either are delayed at the federal side or that have just been a failed effort…there is some competition amongst states to see who can be first when it comes to handling certain aspects of antitrust.
Khara Boender then asked the panelists to outline how state antitrust actions might impact state economies. Ted Bolema summarized how many of the states that create bills incorporating abuse of dominance provisions or whose regulatory agencies pursue litigation aimed at technology companies for their perceived abuse of dominance analyze the market in a certain manner. Bolema stated that state regulators often analyzed in a “vertical sort of structure as if we’re talking about the auto industry or the supply chain in any other market. It’s a lot more complicated when we get into technology markets. There’s all the interoperability issues, there’s all the standards, there’s all the data…security, all these different things.”
Bolema expounded further on the oft-poorly fleshed out abuse of dominance standard in bills such as a current Minnesota proposal:
Just thinking about the abuse of dominance bill, for example, it says it refers to dominance as unilateral power to set prices or other standards and any differentiated product they may view like for example higher end restaurants within a mile or two up here, there’s a lot of those. They have very differentiated products and looking at their menus, they seem to have plenty of power to set prices. But, is there an antitrust problem with them? Are they abusing their dominance? You can just see that it’s going to apply all over the economy. And then of course, it’s just all the unintended consequences that come from all of these things.
Eric Stock voiced his agreement with Ted Bolema, stating “there’s lots of industries that could be considered to have dominance, especially under the standard that Ted was explaining” and “this idea that dominance only refers to big companies in the country or even the world is totally wrong,” and further emphasized that “when you’re a state legislature, you should be thinking about your local businesses and you should be thinking about the impact on your state economy and employment and litigation costs when you’re passing legislation of general applicability.” Vic Domen additionally followed suit saying “these bills, as Eric said, apply to many, many different industries, and you’ve seen it happen in the past too, where a state that’s over-regulating loses those businesses. They simply leave.” Domen continued, noting “we don’t know what the unintended consequences are until it’s too late. And then it’s almost impossible to reverse that trend. And I think that’s something that legislators really need to keep in mind.”
The panelists all noted a worrying trend from the states described by Caleb Williamson – states are failing to recognize that their efforts to regulate tech firms that they believe are dominant touch on the entire ecosystem of technology and actually could harm the entire U.S. based economy. Vic Domen agreed, further expounding on this thought and noting that states attempting to regulate technology firms are not getting the results they want therefore they’re trying to change the rules of the game. Domen noted the biggest debate in antitrust circles is “do you really need to [change the rules], or do you actually need to prove the harm that the laws that are on the books already are intended to really get to? Right now, the consensus in some arenas is, well, we’re not winning, so we’re gonna change the rules.”
Wrapping up, the panelists were not wholly pessimistic about the efforts from states to engage in antitrust activities. Throughout the discussion, the panelists offered insights and recommendations for how state legislatures can work to strengthen antitrust laws and promote fair competition in the economy. Panelists agreed on the value of state-led efforts, however, they emphasized the importance of collaboration between state and federal authorities, a strong economic basis for action, and the need for ongoing dialogue and engagement between legislators, businesses, and consumers.