Explainer Episode 22 – Senator Klobuchar’s Antitrust Bill

Asheesh Agarwal and Ashley Baker join the podcast to discuss Senator Amy Klobuchar’s recently-announced bill to amend antitrust law.

How would the bill adjust the definition of “exclusionary conduct”? What would it mean for the government’s ability to seek civil fines for antitrust violations? And how does the bill fit into the larger conversation about antitrust law in Washington?


Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.

[Music and narration]


Introduction:  Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker. 


Micah Wallen:  Welcome to the Regulatory Transparency Project’s Explainer podcast series, which is part of RTP’s Fourth Branch podcast series. My name is Micah Wallen, and I am the Assistant Director of Practice Groups in the Regulatory Transparency Project. 


Today I’m happy to be joined by both Ashley Baker and Asheesh Agarwal to discuss the recent and upcoming developments in antitrust law. Ashely is the Director of Public Policy at the Committee for Justice, and Asheesh is Deputy General Counsel at TechFreedom. Thank you both for taking the time to join us today. 


I wanted to start off by asking about probably the latest and most recent piece of news in antitrust law, the Amy Klobuchar bill which was introduced last week. Ashley, we’ll start with you. I’d love to get both of your reactions and analysis, though, on what that looks like and what you think that means for antitrust law moving forward. 


 Ashley Baker:  Great, thank you. And thank you for having me. Last week, Senator Klobuchar introduced a long-anticipated antitrust bill that there have been several versions of over the past year, and a lot of talk of and a lot of analysis going on in both the House and the Senate and within agencies about what do we do with our antitrust laws, if anything, going forward, and how do we handle digital markets?


So last week, Senator Klobuchar introduced what is entitled the Competition and Antitrust Law Enforcement Reform Act of 2021. However, I would point out that title is a little bit of a misnomer. Rather than simply giving tools to strengthen enforcement, it is more of a radical overhaul of the way antitrust law has functioned in the past 45 years. And more than anything, it’s a warning for companies not to become too large, essentially. And it’s something that would affect all agencies. 


To give a quick rundown, essentially the Klobuchar bill would prohibit businesses from practices that could, quote, “harm competitors.” It reinvents legal standards that define exclusionary conduct as conduct that materially disadvantages or tends to foreclose or limit the ability or incentive of one or more actual or potential competitors, rather than under our current standard which would be harm to competition in a relevant market or harm to the competitive process or the consumer. 


So in the United States, our antitrust laws have protected the competitive process and not the competitors, though. So harming one’s competitors is not an antitrust violation. Outcompeting competitors is exactly how competition is supposed to work. A couple of the specific provisions here, to go over quickly, it more broadly shifts things to what I would call more of a risk-based framework. Rather than focusing on proposed mergers that represent actual harm to the consumer or the competitive process, it would add this risk-based standard to our foundational antitrust laws. And it does so by amending the Clayton Act to prohibit what it calls exclusionary conduct that presents an appreciable risk of harming competition. 

What exactly is appreciable risk is a little bit unclear. It seems like the standard is kind of like the “I know it when I see it” theory of competition law, which is clearly not a very tractable standard. 


One of the more concerning parts of the bill for me was what it had to say about IP protection. And although it explicitly excludes applying for or enforcing a patent trademark or copyright alone from constituting exclusionary conduct, it caveats that with “unless baseless or in bad faith,” whatever that means. However, these activities may be considered as part of a course of conduct that establishes exclusionary conduct. So in other words, obtaining IP protection for your property can be considered exclusionary conduct under Klobuchar’s bill, which I think is very problematic.


There are also a lot of — there’s a lot in here regarding mergers and regarding monetary penalties and monetary damages regulated by the FTC and other agencies. And I think we’ll get into that in just a few minutes. 


Asheesh Agarwal:  Well, Ashley is exactly right that this bill does represent a pretty radical departure from a bipartisan consensus that we’ve had regarding antitrust law and policy over the past 40 years. So Republicans and Democrats might differ around the edges, but by and large, there has been a broad consensus that antitrust law is about protecting competition rather than individual competitors, that the government should bear the burden of proof when it comes to enforcement actions, and that that proof should require — be empirically grounded in actual economic evidence. And this bill breaks from all of that. 


So I’ll start out by saying some nice things, though, which is I think the bill does do a couple of good things. One is it would increase funding for the antitrust agencies. And there’s pretty broad recognition across the spectrum that antitrust enforcement resources haven’t kept up with the growth of the economy, so that is probably a good thing. In addition, the bill calls for more transparency and more informed decision making by the agencies. So it calls for parties, after a merger, to provide data back to the agencies so that the agencies can do a retrospective analysis to see how a particular transaction affected consumers. And that’s probably a good thing because we do want the agencies to be making informed decisions. 

Unfortunately, though, as Ashley says, the bill does a lot of other things that are very troubling. So to take her first example, the bill defines exclusionary conduct as basically harming a competitor. So that’s essentially anything that a business does arguably hurts a competitor, from introducing a new product to lowering prices. These are all things that the company is doing to maximize its own profits, which they’re well within their purview to do, but that also might take away business from one of their competitors. Under the bill, that company would have to — would bear the burden of proof that what it’s doing is, in fact, procompetitive rather than something designed to harm a competitor. 


If this part of the bill actually were to become law, I think that courts would constrain it much in the same way that the — under the Sherman Act today, arguably any contract at all is anticompetitive because every contract is a restraint of trade. But over time, courts have really narrowed that statutory language into something that makes economic sense. And I suspect if this bill became law, that would happen too, but it would take many years, a lot of litigation costs, and create a lot of uncertainty for the business sector. 


Another thing that the bill does that’s very troubling is it actually says is to change merger presumptions. So basically, for mergers of a particular size or where a company has a particular share of the marketplace, the burden would shift. And instead of the government having to prove that that particular merger is anticompetitive, the company would have to prove that it’s procompetitive. So what this could do is delay a lot of transactions, add to costs and uncertainty, and really disadvantage American companies vis-à-vis their foreign competitors. 


And one of the things to keep in mind is that these proposals extend beyond so-called big tech. There’s a lot of frustration with our biggest technology companies on both sides of the aisle for different reasons, but these proposals would affect healthcare, energy, retail, you name it. So I think a lot of industries are going to have to pay attention to these proposals, even though I think the genesis of the concern is coming from the tech sector. 


The third part of the bill that I’ll highlight for now is the imposition of civil fines. So the bill allows the antitrust agencies to seek enormous monetary penalties, up to 15 percent of a company’s earnings. And there’s some other provisions as well. One of the huge problems with these provisions is that they’re untied from actual consumer harm. They’re tied to harm to a competitor. So if some company lowers prices or takes other actions to grow its business and that ends up harming a competitor—not consumers, mind you, competitors—they could be subject to just enormous fines. And so I think that’s something to watch as well. 


Micah Wallen:  Just a quick follow-up question I had as well is does this bill embrace — it seems difficult to go to protecting competitors instead of competition policy position without embracing “big is bad,” without just finding companies who are violating antitrust just because of their sheer size rather than their actual conduct. Does the bill speak to that, to sort of returning to that type of analysis that we saw prior to the consumer welfare standard, or does it sort of step around that issue and that idea?


Asheesh Agarwal:  Oh, it absolutely embraces that idea that big is bad. And it’s interesting. That concept came around what wasn’t prevalent in the early days of antitrust, but under President Johnson, Donald Turner, who as Assistant Attorney General under President Johnson, started to chip away at that notion because he recognized, and they recognized 60 years ago, that was not a viable economic foundation for antitrust law. And to give you an example of how the bill embraces that big is bad concept is it says that any merger is subject to this additional scrutiny and the flipped presumption if the acquiring company has market power in any market. 


So take Amazon’s acquisition of Whole Foods. Well, Amazon wasn’t in the grocery market whenever that acquisition took place. There was no particular reason to think that Amazon was leading to higher prices for consumers. Yet, under this bill, Amazon would have to prove why its acquisition of Whole Foods was procompetitive. It doesn’t necessarily make a whole lot of sense. 


Ashley Baker:  And I would add to that that in the litigation, proving procompetitive efficiencies is incredibly difficult, if not almost impossible. And when it comes to shifting the burden of proof to the — away from the government, which really goes against our fundamental system of fairness and due process, and to the companies, it makes — essentially, it’s based on what’s really kind of a fake litigation crisis, is their rationale for this. 


It’s not as if the FTC and the DOJ are having trouble winning cases. And in this particular area, I think it’s in the past decade, the FTC and DOJ combined have lost, I believe, four or five cases. And there’s only been one time ever in a litigated case that a defendant has successfully prevailed on an efficiencies defense. So when you shift the burden, you’re making it really difficult for the defendant. This is going to affect everyone across all sectors as well. 


Asheesh Agarwal:  And one of the things that I’d be — that I’d caution people who might be angry at a particular industry sector is that proposals like this really do give the government quite a bit of power over how private actors are operating in the economy. So we see this happen in the context of the Federal Communications Commission where they have this broad public industry standard, and they have to approve transactions under a much more amorphous standard. 


And what has happened over time is the FCC has often essentially browbeaten companies into agreeing to certain terms before they’ll approve transactions, even when those terms don’t necessarily have anything to do with consumer welfare. So there are examples where the FCC has required companies to agree to particular criteria, hiring criteria or what have you, that just raises a lot of concerns. One phrase we throw out there is we do not have a “mother, may I?” economy in this country, for very good reason.


Ashley Baker:  And you’re right. You can see this playing out across other agencies, across other sectors. There’s more fundamentally from that “mother, may I?” perspective that you have not only the FCC. You see that across the EPA. You can see that in the financial services industries. If you can recall how Met Life, for example, was subjected to what were some really unclear standards that really made no sense at the time and had nothing to do with risk. I think you’re going down the path of just letting the bureaucrats just make judgement calls that gives them a vast amount of discretion, and then you’re calling on the courts to rubber stamp it, essentially. 


Asheesh Agarwal:  Ashley, one of the things I wanted to ask you is how do you think the bill will be received on the Hill? We obviously have the Third Way report from Representative Buck, and certainly there are Republicans who are interested in taking a more aggressive stand. How should those sorts of Republicans think about this bill?


Ashley Baker:  That’s a really great question. And I think, starting with the Third Way report, it does — there are some symmetries between some portions of this bill and some of the recommendations in the report, or some of the things that were in that report that said we need a little bit of further feedback, which I think it’s very important that we give more feedback as experts on those issues such as burden shifting and essential facilities and some of those things that are listed in the Third Way report. 


But one difference, though, specifically going back to burden shifting and how it would be implemented was this Third Way report, it’s kind of shifting the burden of proof away from by having Congress clarify the intent of the Clayton Act, whereas it’s a lot more aggressive in the Klobuchar bill in that it’s asking Congress to directly amend Section 2 of the Clayton Act. And I’m not entirely sure if that would be much of a practical difference, which of those two routes you went. But I do think that’s something that stood out to me. 


Overall, though, there are a lot of things in here that Republicans should disagree with because it affects industries way beyond tech. And sure, maybe this can be applied to one or two tech companies. Maybe it will really dismantle a company or two, or really harm them. But I think before we get into how it should be received, I think an appropriate question for both sides is what are you trying to achieve? And I think for many people on the right, what they are trying to achieve is not a competition-related concern. I think a lot of their concerns are over speech and privacy and some of these other issues that are very valid concerns. 


I don’t think they belong in the realm of competition law where you have those on the left side of the aisle who just think that big is bad, corporate power as a whole is bad, and don’t really have these same capitalist foundations as those on the right. I think it’s worth reiterating to those on the Hill on the right of center is how this will not stop at just tech. You can’t pass a law like this and expect it to be used one time and then they will stop. 


Asheesh Agarwal:  Well, Ashley, you’re spot on about that. In addition, I hope that people recognize that the United States is not operating in a vacuum here. Many Democrats have made the point that we need to be concerned, just as a country, about competition from China. I think it was Representative Ro Khanna who said we don’t want, through overly aggressive antitrust enforcement, to create a world where the biggest tech companies are all Chinese affiliated companies. 


And that’s not to say that big tech companies or any segment of the economy should be given a pass from our antitrust laws; not at all. They should be held accountable just like everybody else. But the idea that the Congress would enact a law designed to kneecap some of our biggest companies who are, quite frankly, responsible for a lot of the growth that we’re seeing in our economy and a lot of the innovation, probably to me is somewhat problematic and ill advised. 


Ashley Baker:  I completely agree. And when this bill was introduced, she didn’t know, but she’d like to see more hearings related on how it could be applied to other industries specifically, specifically pharmaceuticals, telecom and communications, agriculture, which affects a large swath of middle America. Also, railroad industry, I think, was mentioned at one point, which was a bit curious because we’ve kind of been there before, and railroad deregulation was hugely successful. So I don’t think the intent even of this was just the tech industry. I think that this is really a restructuring of our entire economy in disguise.


Micah Wallen:  And do you both think that this indicative of the Biden administration’s planned approach to antitrust law? Do you think this is going to be the policy positions we’re going to see from the White House for the next four years, or do you think there’s going to be some meaningful distinctions there?


Ashley Baker:  I would say I think it’s indicative of the way that he has approached regulatory review, is one thing that sort of stood out. Particularly, he’s asking the OMB to review regs in a way that fully accounts for benefits that are impossible or difficult to quantify or you can’t really put on paper. And that’s not really very tractable. That’s not really grounded in economics. And I see that playing out here as well. That’s one parallel. I’m not sure if Asheesh has more to build upon that.


Asheesh Agarwal:  I am hopeful that this is not the approach that we are going to see from the Biden administration. Of course, we haven’t seen who he’s planning to nominate yet to head the antitrust division or to chair the FTC. One of the people who has been heavily involved is Bill Baer at both the FTC and the DOJ. And Mr. Baer is somebody who comes from this broad, bipartisan consensus of the past 40 years. He would rather be more aggressive than others, but he has, I believe, more recently at Chairman Cicilline’s hearings last year, talked a little bit about maybe changing presumptions for certain mergers. But he is not somebody who is looking to rewrite antitrust law and move away from the consumer welfare standard. 


So I’m hoping that the Biden administration will adopt more of that approach within the lines, and that this bill from Senator Klobuchar is much more of an opening salvo, something that might frame where the negotiations take place rather than as something that seriously has a chance of getting enacted into law.


Ashley Baker:  I would probably agree with that. And to clarify, it’s still very early, and there is nothing that’s come out of the Biden administration yet specifically related to this that is hugely alarming. But I was just pointing to that one example as one thing that kind of uses the same standard that’s hard to quantify. But I generally agree with what you said there.


Micah Wallen:  And one last question, before I give you both a chance to cover anything you’d like to cover before we close, is I feel like one aspect of the antitrust debate in recent years is the unexpected joining in the fray of some notable Republican senators and representatives, mainly because of concerns over big tech and censorship and free speech, etc. 


Are there any bones thrown to that side of the aisle in this bill? Do you think that there’s a likelihood that some Republicans will find things that they like in this bill that have those concerns, or did this bill take a different approach?


Asheesh Agarwal:  Go ahead, Ashley.


Ashley Baker:  Sure. So I would say that I think the fact that we have that political dynamic at this moment in time definitely lends itself to this bill overall being more aggressive than it could have been otherwise, and they’re hoping to ride on some of that anger over big tech and hoping that people on the right side of the aisle don’t notice that this applies to essentially everything else. 


But getting back to what I said about the first question needs to be what problem are we trying to address, I think the left and the right are trying to address two very different perceived problems. And with the problems that the right is trying to address, I think a lot of those are not competition problems, and that’s very relevant to keep in mind.


Asheesh Agarwal:  So I didn’t see anything in the bill about Section 230 or holding companies or platforms accountable for those free speech issues, so in that sense, no, I didn’t see a bone thrown there at all. And I’ll note that even Representative Buck in the Third Way report—and he offered quite a bit of praise for Chairman Cicilline—did say that there wasn’t enough discussion about those sorts of issues. We don’t see any of that discussion in the bill. 


I do think it’s important, as Ashley is alluding to, for Republicans to have their own vision for antitrust law going forward. Senator Lee has a bill out there that calls for one antitrust agency. It’s very consistent with the unitary executive viewpoint that many conservatives have. But unfortunately, I don’t think this bill is a bill designed to get a lot of Republican votes. 


Ashley Baker:  No, it’s not that this is designed to get Republican votes, but I think the political dynamic at the time, it makes the environment more conducive to something as broad as this, at least, the substance a bit aside. 


Micah Wallen:  Gotcha. Interesting. And I guess before we close today, is there anything else either of you would like to cover or discuss?


Ashley Baker:  Asheesh —


Asheesh Agarwal:  — No. Oh, go ahead, Ashley.


Ashley Baker:  Oh, I’m sorry. I didn’t mean to interrupt. I just wanted to ask if maybe you could elaborate a bit on the provisions in the bill related to fines and civil penalty authority. That’s more your area of expertise.


Asheesh Agarwal:  Yeah. It was just really surprising in it. So this is in the section on exclusionary conduct, and it allows the antitrust agencies to seek civil penalties up to 15 percent of the total U.S. revenues for the person accused of this exclusionary conduct, or 30 percent of U.S. revenues of any person who was affected by this exclusionary conduct. 


If we’re talking about the tech companies or the energy companies or healthcare, you are talking about potentially tens of billions of dollars in civil fines that are untethered from actual consumer harm and that would be on top of the treble damages and injunctive relief and the other things that you can get through the existing antitrust laws. So it is just an enormously large sledgehammer designed to address, as Ashley was alluding to, what is the real problem here?


Ashley Baker:  And I think the fact that it’s on top of treble damages and other penalties and other perhaps even structural remedies really — you want the — if you’re going to have civil penalties that are this broad, they need to back to the consumers in an appropriate way that matches the offense. And when you’re stacking damages on top of damages, really what you’re accomplishing is just putting a sledgehammer to the company, not trying to redress actual consumer harms.


Asheesh Agarwal:  I guess the final point I’ll make is there’s a real risk of chilling procompetitive behavior here. Antitrust law is rarely black and white, unless you’re talking about something like naked price fixing. A contract that might be exclusionary and anticompetitive in one context, in another context, in most contexts, is just fine. So what’s the prospect of these enormous damages? 


I do think that if this bill were to become law, I think you’d chill a lot of very procompetitive behavior. I think I would take the courts several years to sort out what really — and the agencies several years to sort out what the real risks are.


Ashley Baker:  Yeah, I agree in that it’s not necessarily black and white. But one thing I think is very clear is just that under current antitrust law, evidence of profit-seeking behavior alone is not enough to establish antitrust liability. And that’s essentially what this does. 


Micah Wallen:  Absolutely. Well, I’d like to thank both Ashley and Asheesh for joining us today. This was a really great discussion on a pressing area of law. I’d like to thank our audience for tuning in to this episode of RTP’s Explainer podcast series. Please check our website, www.regproject.org, to learn more about this issue and a host of other regulatory topics you may be interested in. Again, thank you both, and this is RTP signing off. 




Conclusion:  On behalf of The Federalist Society’s Regulatory Transparency Project, thanks for tuning in to the Fourth Branch podcast. To catch every new episode when it’s released, you can subscribe on Apple Podcasts, Google Play, and Spreaker. For the latest from RTP, please visit our website at www.regproject.org.




This has been a FedSoc audio production.

Asheesh Agarwal


American Edge Project and U.S. Chamber of Commerce

Ashley Baker

Director of Public Policy

Committee for Justice

Antitrust & Consumer Protection

The Federalist Society and Regulatory Transparency Project take no position on particular legal or public policy matters. All expressions of opinion are those of the speaker(s). To join the debate, please email us at [email protected].

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