A pioneering anti-trust bill that's moving through the New York State legislature could give the government and private parties unprecedented power to sue large corporations, specifically Big Tech, as a means of reining in abusive, monopolistic practices—even when those companies don't qualify as monopolies.
Known as the 21st Century Antitrust Act, the bill passed the New York State Senate on Monday and could be voted on in the New York State Assembly as soon as this week. The first-of-its-kind in the country, the legislation would pave the way for similar updates to antitrust laws at the federal level and in other states.
"What we're proposing here in New York would be a change not just for our state but for our entire nation...would give our regulators real teeth to fight to make sure we have a democratic economy, where there are many voices that can compete with one another," New York state Sen. Michael Gianaris, who is also the author of the bill, said at a press conference on Monday ahead of the Senate vote.
The legislation also has language explicitly intended to protect workers. It recognizes how giant corporations like Amazon can use their market power to eliminate jobs, depress wages, and degrade the benefits not only of their own employees, but across entire industries via price-fixing and other anti-competitive practices.
What is the 21st Century Antitrust Act?
New York's 21st Century Antitrust Act would revamp a 122-year-old antitrust law in New York, that has been steadily weakened over the past four decades due to court rulings from judges that have loosened antitrust laws and allowed for corporate consolidation.
The new legislation would give private companies and the government the power to sue individual corporations that act to stifle competition for monopolizing industries and abusing their positions to exclude other companies or drive them out of business. Currently, the state can only seek to punish two or more companies that collaborate or conspire together.
The legislation also creates an "abuse of dominance" standard—modelled after European legislation, but unprecedented in the United States—that allows the attorney general and private parties to use direct evidence of a company's power in an industry, such as the ability to set prices and force workers to sign non-compete clauses that lock them into poor working conditions. Currently, we use a prohibition on monopolization standard that relies on economists to define markets and market shares, which can be costly, time intensive, and rigid.
In cases where proving market share is necessary, the bill has clear rules for defining which companies are dominant and should be held to enforcement rules. In this case, "dominant" is defined as companies that control more than 40 percent of a product market or 30 percent of a labor or supplier market.
The legislation also includes significantly higher penalties for antitrust violations (up to $100 million in fines up from the current amount of $1 million for corporations).
"This bill is really epic," prominent anti-trust attorney and Fordham University law professor Zephyr Teachout said at Monday's press conference. "It establishes an 'abuse of dominance' standard which allows plaintiffs to show a firm is dominant and controlling at a much more realistic level than courts have allowed for the past 40 years."
What does it mean for workers and the labor movement?
The legislation also has groundbreaking protections for workers which aren't normally included in state and federal antitrust laws, according to legal experts.
The law explicitly targets companies that degrade the working conditions of their employees, independent contractors, and workers in other industries. These protections could have significant implications for companies like Amazon, which has been known to drive down wages in the warehouse and last mile delivery industries, if courts can prove that they've put downward pressure on wages, benefits, or working conditions in an industry. Another example of this is the rideshare giant Uber, which drives down prices for customers by taking a loss on rides that are subsidized by venture capital and sustains those prices by keeping drivers' wages artificially low.
The 21st Century Antitrust Act would effectively stop the use of non-compete and no-poach clauses that lock workers jobs by contractually preventing them from getting new ones.
For example, the temp warehousing industry often locks workers into minimum wage jobs by preventing workers from leaving to work for competitors for six months after they quit, effectively forcing workers to remain in the same job and settle for whatever conditions their employer offers. Amazon previously made its warehouse workers and contractors sign these clauses.
"This legislation is extremely important for workers, especially the Teamsters. Amazon’s market share is an existential threat to workers in the industry," said Bernadette Kelly, recording secretary of Teamsters Local 210 in New York, which represents warehousing and delivery workers. "Amazon has become a dominant employer and pays half the rate of others in the delivery industry. Those bad conditions trickle down to the rest of the economy."
Who supports it?
The bill has received enthusiastic support from a vast coalition of labor unions—such as the Teamsters and the Retail, Wholesale and Department Store Union—politicians, small business organizations, workers' centers, and workers. It has also earned support from small and mid-sized tech and media companies, such as Yelp and media company Genius, that claim to have suffered from Google's anti-competitive practices.
“This law is critical for the tech and business industry here in New York," said Luther Lowe, vice president of public policy at Yelp at Monday's conference. "We need the legislation for the 21st century economy we live in. Companies like Yelp and ZocDoc are being smothered by Google. Google steers and leads customers into their own review database which reveals multiple problems."
"Genius has experienced the anti-competitive power and dominance first hand," said Ben Gross, the chief strategy officer at Genius. "Google has been displaying content that was lifted from Genius for years now with total impunity. We think this legislation goes a long way to fix that."
Who opposes it?
Some small businesses and business associations, such as the Business Council of New York State and the Manufacturer's Association of New York, have spoken out against the legislation, arguing that it would impose European-style regulations, and create substantial new costs for small businesses.
"This legislation... would have an extraordinary number of harmful (likely unintended) repercussions for the local New York economy and local businesses," the Business Council of New York State wrote in a report. "The proposed legislation makes a number of dramatic alterations to New York’s antitrust law that are astonishing both in their scope and in their potential to disrupt and damage the local business environment."
When is it expected to pass?
The bill passed the senate on Monday—and labor and small business activists are now pushing for a vote in the assembly before the current session ends on June 10. If the bill doesn't reach a vote, it will be considered again when the legislative session begins in January 2022. You can read the text of the bill here.