Partnership for New York City, January 12, 2022 — The Retail Council joined business leaders and legal experts in signing a letter expressing opposition to currently pending antitrust legislation. The letter, printed in its entirety below, was published by Partnership for New York City.

Dear Governor Hochul and New York State Legislators, We write to alert you to the potential damage to New York City and state that would result from enacting antitrust legislation that is currently pending in the state Legislature (S.933A/A.1812A) and was approved by the Senate’s Consumer Protection Committee this morning.

This legislation purports to curb the excesses of the largest companies, particularly “big tech,” but would instead create a new level of risk, cost, and potential liability for all New York state businesses, large and small. It would diverge from federal antitrust law and establish a new standard in this country for what constitutes a monopoly.

If enacted, this law would make New York far less attractive for business investment and job creation, since it will put restrictions on New York firms that their competitors in other states and most countries would not be subject to. It would also discourage competitive business activities that benefit consumers with lower prices and innovative products. Ultimately, the result of this legislation will be lost jobs and reduced tax revenues.

Here are the specific ways in which this legislation would harm New York businesses and consumers:

-It would impose two competing and independent standards on New York businesses—the well understood “monopolization” standard reflected in U.S. federal law, and a new, “abuse of dominance” standard never before adopted in any U.S. jurisdiction. The “abuse of dominance” standard, which was developed in Europe and other countries with very different legal and regulatory systems from the U.S., is inconsistent with the U.S. monopolization standard and has no judicial or enforcement precedent in the United States. Adopting the abuse of dominance standard would result in a system in which the legal rules are unclear and not pragmatically enforceable by the Attorney General and the state’s courts. The new, vague European “abuse of dominance” standard would subject companies operating in New York, including small businesses, to accusations—including by private class-action lawyers with incentives to push the boundaries of the law—that they violated the law by doing things that benefit consumers and have been consistently encouraged by U.S. antitrust laws, such as offering discounted prices, introducing new products or services, or entering into partnerships with other small businesses.
While some may think of “dominance” as picking up only very large national markets, the term may also be applied in much smaller markets defined by geography or specialization. By way of example, a local newspaper, liquor store or theater might be found to be “dominant” under the proposed law’s vague standards, opening them up to litigation from competitors who might complain that their distribution system, ability to obtain and pass along discounts to their customers, or ability to obtain exclusive rights for a limited area for a motion picture are “abuse”. These every-day business decisions could open them up to treble damage class action claims.

-The legislation would encourage frivolous litigation by authorizing expensive private class actions and subjecting businesses to triple damages. Combined with the new amorphous standards, the new bills would effectively shift to businesses the burden of proving that their normal business conduct was lawful. There is also a substantial risk that smaller businesses will be held up by “trolls”—lawyers that assert weak or baseless claims knowing that a business doesn’t have the resources to mount a defense. Trolls are already a problem in other areas of the law.

-The legislation provides for criminal penalties, including imprisonment for up to four years for monopolization and corporate penalties of up to $100 million. Instead of protecting consumers, these enhanced penalties, combined with imprecise legal standards, would chill competition, innovation and the willingness of companies to come to New York.

-The legislation adopts a notification and waiting period for the transfer of assets that is twice as long as the notification period under federal law (60 days v. 30 days) and that is triggered at a threshold of one-tenth of the federal standard ($9.2M v. $92M). Under federal law, a great deal of trading for investment purposes requires no filing. These notification requirements may compel firms that transact in securities and mergers and acquisitions to locate out of the state in order to remain competitive.

The implications of these changes would be significant. New York would be an outlier in its antitrust enforcement posture not only in the U.S., but internationally. Moreover, the new rules will not improve the ability of state authorities to prosecute bad business conduct that hurts consumers. New York already has effective antitrust laws that are vigorously enforced by the Attorney General’s Office, often in close coordination with the federal antitrust enforcement agencies and sister agencies in other states.

New York City is America’s global business and financial capital. This proposed legislation puts that status at risk, at the same time as the state is seeking to recover jobs lost during the pandemic. We strongly urge that you reject these bills in the best interests of the residents, consumers, employers and employees of New York state.

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