Media Contact: Ashley Baker
Mobile: (704) 214-0542
SCOTUS Strikes Blow Against Cancel Culture in Donor Disclosure Decision
July 1, 2021 

The Committee for Justice released the following statement by its president, Curt Levey, on the Supreme Court's 6-3 decision today in Americans for Prosperity v. Bonta, striking down California's requirement that charitable nonprofits disclose the names and addresses of their major donors.

Washington, D.C. – Today the Supreme Court struck a blow for the First Amendment freedom of association and against the reigning cancel culture, when it struck down California's donor disclosure requirement for nonprofit organizations, concluding that it exposes donors to harassment, intimidation, and even violence by those who oppose an organization's viewpoint.

The Court ruled that the result is to chill organizations' and their donors First Amendment right to freedom of association. It pointed out that the chill is particularly severe given California’s demonstrated failure to protect the confidentiality of donor information. The two conservative nonprofit organizations that challenged California's law noted that the problem is made even worse where, as here, the donors and nonprofits hold political views that differ markedly from those of the state.
 
The Justices were well aware that today's culture makes the First Amendment right to anonymous association more important than ever, as ideological opponents are targeted, harassed, and even destroyed in ways that were once unthinkable. Moreover, as the Court noted, "risks are heightened in the 21st century" because the internet facilitates access to confidential information. The internet also makes it easier to mobilize cancel culture tactics against donors to organizations one dislikes.

It is important to remember that, despite the use of "dark money" as an invective these days, America has a long tradition of protecting anonymity under the First Amendment, dating back to the anonymous publication of the Federalist Papers and Thomas Paine's Common Sense. And, with racial issues at the forefront of the current public debate, it is fitting that today's decision was based on the Supreme Court's 1958 precedent in NAACP v. Alabama, in which the Court unanimously ruled that the First Amendment protected the NAACP from having to disclose its membership list to the state of Alabama.

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For Media Inquiries: Curt Levey, 202.510.0128 (cell), clevey@committeeforjustice.org

In Re: Rescission of 2015 Statement of Enforcement Principles On Unfair Methods of Competition Under FTC Act § 5
The following comments were submitted by Ashley Baker of the Committee for Justice and Daren Bakst of The Heritage Foundation, on behalf of a group of 20 legal experts, conservative advocates, former FTC officials, and economists to the FTC for consideration in the Commission’s scheduled July 1 vote on whether to rescind the 2015 Statement of Enforcement Principles Regarding “Unfair Methods of Competition” (UMC) Under Section 5 of the FTC Act.

Our comments explained that:

  • The rushed process through which this is being considered failed to allow for meaningful public input and transparency. The Commission’s decision to allow only six days for public comment on significant agenda items that will drastically affect enforcement policy decisions is a deterrent to substantive public input. The Commission should allow for a standard of 30 days of public input

  • The rescission of the 2015 statement would untether the FTC’s enforcement decisions from concerns over harms to consumers and to the competitive process. The 2015 statement provides a bipartisan framework that lays out widely agreed upon core principles regarding antitrust law and appropriately prioritizes consumer welfare, which remains the goal of antitrust as recognized and reaffirmed in existing case law.

  • Abandoning the 2015 statement’s framework would remove important guardrails that established predictability and guidance in enforcement actions. The FTC’s misadventure into UMC expansionism would generate unwarranted confusion, and eventually courts would have to grapple with questions of interpreting the outer boundaries of Section 5 authority that were previously cabined by the 2015 statement. 

  • And most of all, we are concerned that the sudden rush to revoke the 2015 statement foreshadows a broader agenda to radically change antitrust law by greatly expanding the FTC’s enforcement discretion.

The comments can be viewed online or read below.
Dear Chair Khan and Commissioners Phillips, Chopra, Slaughter, and Wilson:
We, the undersigned, appreciate this opportunity to provide comments regarding the possible rescission of the Commission’s 2015 Statement of Enforcement Principles Regarding Unfair Methods of Competition (UMC) Under Federal Trade Commission Act § 5 (2015 statement).
 
While we applaud the Commission’s broader goal of bringing transparency through a series of monthly open meetings, allowing only six days for public comment on significant agenda items that will drastically affect enforcement policy decisions is a deterrent to substantive public input.[1] As Commissioner Noah Phillips stated, “a mere week’s notice on matters requiring serious deliberation, and a number of the policies themselves, undermine that very goal” of transparency.[2] To allow for both transparency and substantive public participating in these proceedings, the Commission should allow for a standard of 30 days of public input.
More troubling still is the fact that the Commission will be considering a significant shift in enforcement policy as the open meeting agenda will include this sudden push to revoke the 2015 statement. This policy statement provides a bipartisan framework that lays out widely agreed upon core principles regarding antitrust law and the Commission’s Section 5 enforcement. Among these principles is “the promotion of consumer welfare” and focusing enforcement on acts or practices that “must cause, or be likely to cause, harm to competition or the competitive process.” 
 
As the Commission explained when issuing its 2015 statement: “In describing the principles and overarching analytical framework that guide the Commission’s application of Section 5, our statement affirms that Section 5 is aligned with the other antitrust laws, which have evolved over time and are guided by the goal of promoting consumer welfare and informed by economic analysis.”[3]
The rescission of the 2015 statement would untether the Commission’s enforcement decisions from concerns over harms to consumers and to the competitive process. Consumer welfare is appropriately prioritized in the 2015 statement and remains the goal of antitrust as recognized and reaffirmed in existing case law.
 
Additionally, the Commission’s recent Notice of the open meeting did not even state an objective justification for the quick removal of the 2015 policy, nor did it indicate whether it would be replaced by new guidance. 
 
Abandoning the 2015 statement’s framework would remove important guardrails that established predictability and guidance in enforcement actions. The lack of predictability resulting from the FTC’s re-expanded discretion in invoking broad Section 5 authority on a case-by-case basis would create uncertainty for businesses of all sizes and across all industries. The Commission’s misadventure into UMC expansionism would generate unwarranted confusion, and eventually courts would have to grapple with questions of interpreting the outer boundaries of Section 5 authority that were previously cabined by the 2015 statement.
 
Above all, we are concerned that the Commission’s sudden rush to revoke the 2015 statement foreshadows a broader agenda to radically change antitrust law by greatly expanding the Commission’s enforcement discretion.
 
These concerns have been echoed by others such as Senator Mike Lee (R-UT), who stated that “[s]hould the FTC rescind the statement, it will replace clarity with ambiguity in the midst of a fragile economic recovery. Rescinding the statement would also signal that the Commission rejects the idea that there are any limits to its power or regulatory reach, and that it intends to use Section 5 to address non-economic harms outside the agency’s purview or expertise.”[4]

Proposals to change well-functioning policies deserve serious deliberation and an opportunity for meaningful input from the public and from all stakeholders. We encourage the Commission to adopt a more open process and transparent approach that allows for proper notice and consideration of proposals. We welcome the opportunity to further discuss these views and stand ready to provide additional input.

Sincerely,
Ashley Baker
Director of Public Policy,
The Committee for Justice
 
Daren​ Bakst
Senior Research Fellow in Regulatory Policy Studies
The Heritage Foundation
 
Asheesh Agarwal
Former Assistant Director
FTC Office of Policy Planning
 
Robert H. Bork, Jr.
President
Antitrust Education Project
 
Dan Caprio
Senior Fellow
The Lares Institute
 
James Edwards
Executive Director
Conservatives for Property Rights
 
Richard A. Epstein
The Laurence A. Tisch Professor of Law,
New York University School of Law
The Peter and Kirsten Bedford Senior Fellow,
The Hoover Institution
The James Parker Hall Distinguished Service Professor of Law Emeritus and Senior Lecturer,
The University of Chicago
 
Theodore A. Gebhard
Former Senior Attorney
FTC Office of Policy and Coordination
 
Douglas Holtz-Eakin
President
American Action Forum
 
Tom Hebert
Executive Director
Open Competition Center
 
Jennifer Huddleston
Director of Technology and Innovation Policy
American Action Forum
 
Thomas A. Lambert
Wall Family Chair and Professor of Law
University of Missouri Law School
 
Curt Levey
President
The Committee for Justice
 
Katie McAuliffe
Executive Director
Digital Liberty
 
Doug McCullough
Director
Lone Star Policy Institute
 
Grover Norquist
President
Americans for Tax Reform
 
Timothy Sandefur
Vice President for Litigation
The Goldwater Institute
 
Thomas A. Schatz
President
Citizens Against Government Waste

NOTE: Organizations and affiliations are listed for identification purposes only.
[1] See “FTC Announces Agenda for July 1 Open Commission Meeting.” The Federal Trade Commission. (June 24, 2021), available at: https://www.ftc.gov/news-events/press-releases/2021/06/ftc-announces-agenda-july-1-open-commission-meeting.

[2] Commissioner Noah J. Phillips. @FTC Phillips, Twitter. (June 25, 2021), available at: https://twitter.com/FTCPhillips/status/1408459407134973955.

[3] “Statement of the Federal Trade Commission On the Issuance of Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under Section 5 of the FTC Act.” The Federal Trade Commission. (August 13, 2015), available at: https://www.ftc.gov/system/files/documents/public_statements/735381/150813commissionstatementsection5.pdf.

[4] See “Sen. Lee Expresses Concerns about Possible Revocation of FTC 2015 Statement of Section 5 Enforcement Principles.”(June 24, 2021), available at: https://www.lee.senate.gov/public/index.cfm/press-releases?ID=88C0AA07-BB92-427C-8EEC-63B92E8E6A26.
ICYMI:

If you think that the Democrat impeachment managers are going to manage the economy to help address conservative concerns over Big Tech, then we've got some beachfront property in Wyoming to sell you.

By Ashley Baker
For those who did not receive my update and analysis yesterday evening for the ongoing markup on the House Judiciary Committee antitrust bills:

The House Judiciary Committee majority has scheduled a full-committee mark-up less than two weeks after unveiling the bills and less than 48 hours after disclosing new versions to be offered as substitute amendments. The majority is selling out conservatives in order to ram their whole package through. These are serious changes to a broad area of law that deserve serious consideration. It is clear that House Democrats never intended to allow that to be the case. 

In fact, they have even admitted to such strategies. For example, Chairman Cicilline told the New York Times that in the markup, he’ll take up measures with the most agreement first and worse legislation later. He said: "I think that will be—at least initially may not have the same bipartisan support. My hope is that by doing the technology ones first, which really grew directly out of the report, we’ll build some momentum and understanding with my colleagues to support the second suite of bills."

At least the quiet parts are sometimes said out loud. 

Contrast this with the fact that this was preceded by a more than 16-month investigation, about a dozen hearings, a 450+ page report, and the fact that there have been nine months following the report’s publication. Now that the details to proposed solutions have been drafted without meaningful Republican collaboration, the committee is moving about a month after a partisan report was reported out of committee without a single GOP vote.

Members deserve ample time to digest the latest language. Rather than bypassing the subcommittee, legislative hearings should be held at the subcommittee level. Going straight to full committee without a single legislative hearing and without substantive Republican involvement even in the drafting process is unacceptable. 

Additionally, if you haven’t already, you should read today’s Fox News op-ed by Ranking Member Jordan and Mark Meadows, which expresses many of the same concerns.

In light of the Democrat’s attempt to circumvent thoughtful analysis by ramming six pieces of legislation through committee in strategic order, hopefully these summaries of the bills and of significant changes in the amendments will be helpful.

Thank you for considering our input on a very important issue. More analysis and commentary are forthcoming. Please reach out with questions anytime.
General Points and Notes on the Legislation

  • Each bill targets a specific antitrust issue, but the bills are intended to work in tandem.  

  • The proposals include size-based thresholds (50 million US-based monthly active users or 100,000 monthly active business users, and a parent company with net annual sales or market cap of $600 billion), and a “critical trading partner” which is broadly defined as a platform that has the ability to restrict or impede business users from its customers or a tool/service needed to serve its customers. Additional development of key terms/criteria for application (such as the term “critical trading partner”) are not quite developed.

  • While the bills clearly target Big Tech firms, it could be possible for companies to unintentionally fall within the purview of the legislation. (To provide a historical analogy, under Dodd-Frank, MetLife and GE were certainly not intended to be designated systemically important financial institutions. Years later, courts agreed.)

  • The FTC would receive a bulk of the additional oversight and enforcement responsibilities, making the FTC the de facto antitrust regulator with regard to online platforms (of particular concern, given Lina Kahn’s recent confirmation and subsequent elevation by the White House to serve as the FTC’s Chair and given her role in crafting the HJC’s majority staff report, which, notably, not a single Republican voted for during last month’s markup).  

  • Note: Due to time restraints and the need to do a scavenger hunt through recently introduced amendments in the nature of substitutions, the summaries below are of the five bills that were introduced only a little more than a week ago. It does not include the previously introduced State Antitrust Enforcement Venue Act of 2021. If you would like to discuss this bill or would like a summary, please email me and I can get that to you ASAP.

American Choice and Innovation Online Act, H.R. 3816 (targets “discriminatory” conduct)

  • The bill is sponsored by Chairman Cicilline (D-RI) and co-sponsored by Rep. Ken Buck (R-CO), Rep. Madison Cawthorn (R-NC), and Rep. Lance Gooden (R-TX).

  • It continues to enumerate prohibited conduct focused on interoperability and portability. It also preserves an affirmative defense for conduct necessary for data privacy, core functionality, or legal compliance. The burden of proof would be challenging for defendants to satisfy, as well as whether user conduct could violate the Computer Fraud and Abuse Act is not dispositive of the establishment of an affirmative defense.

  • The bill targets not only acquisitions, but also investments where the covered platform acquires 25% of an entity or “otherwise exercises substantial control.” “Substantial control” is not defined.

  • Gives FTC and DOJ concurrent enforcement authority. Notably, the bill permits state attorneys general to pursue restitution, contract rescission/reformation, and refunds for violations. It also makes additional remedies available to FTC/DOJ, including injunctive relief and the ability of the courts to order divestitures (essentially imposing structural separations).

  • One of the more noteworthy aspects of this bill is the addition of a private right of action with potential recovery of treble damages. This is a gift to trial lawyers, a significant Democratic constituency. 

  • The private right of action shockingly contemplates actions brought by foreign states, specifically including actual damages (except under certain circumstances where this damages cap does not apply) and attorneys fees.  

  • Because the bill shifts the burden of proof such that the platform must prove its action was legitimate by clear and convincing evidence, it will encourage nuisance suits that the platform cannot get dismissed at the pleading stage and which will allow broad discovery by plaintiffs, including foreign entities.

  • The civil penalties under this bill are severe: 15% of the total US revenue of the company for the previous year, or 30% uf the US revenue in any line of business affected or targeted by unlawful conduct during the period of unlawful conduct. 

  • Covered platform designation by FTC or DOJ lasts for 10 years, is published in the Federal Register, with the opportunity to apply to FTC or DOJ to remove the designation (although this is amended in the substitute bill -- see notes above)

  • A covered platform (CP) may not:  

  • Advantage CP’s own products, services, or lines of business over those of a competing business or potential competing business. (i.e. self-preferencing)
  • Exclude or disadvantage products, services, or lines of business of competing business or potential competing business that utilizes CP. (i.e. foreclosure)
  • Materially discriminates between or among similarly situated persons that utilize the CP for the sale or provision of products or services.
  • Restrict or impede dependent businesses that compete with the CP from accessing/interoperating with the same platform, operating system, hardware and software available to CP.
  • In connection with any user interfaces, including search or ranking functionality offered by the CP, treat the CP’s own products, services, or lines of business more favorably than they would be treated under fair and nondiscriminatory search or ranking systems. 
  • Condition access to the covered platform or preferred status on the platform on the purchase or use of other CP products or services. 
  • Use nonpublic data obtained from or generated on the platform by the activities of a business user or their customers, to offer or support the offering of the CP operator’s own competing or potentially competing products or services on the platform. 
  • Restrict or impede dependent businesses from accessing commercial data generated by the activities of a dependent business, or its customers, on the CP or prevent the effective portability of such data. 
  • Restricts or impedes CP users from uninstalling software applications that have been preinstalled on the covered platform or changing default settings that direct or steer CP users to products or services offered by the CP operator on the platform. 
  • Restrict or impede dependent businesses from communicating information or providing links on the CP-to-CP users to facilitate business transactions on or off the CP. 
  • Use nonpublic data obtained from or generated on the platform by the activities of business users, or their customers, to offer or support the offering of the CP operator’s own competing or potentially competing products or services on the platform.
  • If the fact finder determines that a violation of this Act arises from an irreconcilable conflict of interest related to the CP’s concurrent operation of multiple lines of business, the court shall consider requiring divestiture of the line or lines of business that give rise to such conflict. 
  • If the fact finder determines that a CP has shown a pattern or practice of violating this Act, the court shall consider requiring that the CEO forfeit to the U.S. treasury any compensation received by that person during the 12 months preceding or following the filing of a complaint for an alleged violation of this Act.

Platform Competition and Opportunity Act, H.R. 3826 (bans mergers)

  • The bill is sponsored by U.S. Rep. Hakeem Jeffries (D-NY) and co-sponsored by Rep. Ken Buck (R-CO), Rep. Matt Gaetz (R-FL), Rep. Madison Cawthorn (R-NC), and Rep. Lance Gooden (R-TX).

  • Imposes a presumption of illegality for any merger or acquisition by a covered platform, regardless of the transaction’s competitive effects or the size of the acquired entity.  

  • The merging parties would bear the burden to prove that the transaction falls into one of the exemptions to the Hart-Scott-Rodino Act (e.g., acquisitions of non voting-securities) or that the parties are not current or potential future competitors, including for a users’ attention

  • The Act targets not only acquisitions but also investments where the covered platform acquires 25% of an entity or “otherwise exercises substantial control.” “Substantial control” is not defined.

  • A violation of the Act also constitutes an unfair method of competition, possibly allowing the FTC to engage in further rulemaking related to this Act. 

  • The Act allows for State Attorneys General and other parties injured to bring suit and “any person, firm, corporation, or association” may seek injunctive relief.

  • The private right of action shockingly contemplates actions brought by foreign states, specifically including actual damages (except under certain circumstances where this damages cap does not apply) and attorneys fees. 

  • Because the bill shifts the burden of proof such that the platform must prove its action was legitimate by clear and convincing evidence, it will encourage nuisance suits that the platform cannot get dismissed at the pleading stage and which will allow broad discovery by plaintiffs, including foreign entities.

  • While this bill bears some similarities to provisions of Sen. Klobuchar’s CALERA bill, the latter only applies a presumption of illegality to certain types of mergers. Also, this proposal goes further than CALERA by imposing a “clear and convincing” standard for the affirmative defense.

  • Competition for "a users’ attention" is added to the criteria for banning M&As. The Act covers current “competition, nascent competition, or potential competition” for a user’s attention but does not define further how broadly user attention is to be construed.

ACCESS Act, H.R. 3849 (interoperability and portability)  

  • This bill is sponsored by Rep. Mary Gay Scanlon (D-PA) and co-sponsored by Rep. Ken Buck (R-CO), Rep. Burgess Owens (R-UT), Rep. Madison Cawthorn (R-NC), and Rep. Lance Gooden (R-TX).

  • Requires covered platform to maintain transparent, third-party-accessible interfaces, including APIs, for portability and interoperability in compliance with FTC-promulgated standards, and establish and maintain privacy and security standards. 

  • Requires covered platforms to take enumerated steps to facilitate portability and interoperability.
  • Requires offering "functional equivalence" of a platform’s interoperability interface to competing businesses or potential competing businesses.
  • Requires FTC to approve almost all changes to interoperability interfaces or terms of use of covered platforms, with no deadline for the agency approval process. 
  • Note that covered platforms may make a change affecting interoperability without FTC approval for security purposes or another exigent circumstance that creates a risk to user privacy to prevent illegal conduct if it can show that the restriction was narrowly tailored and does not have the purpose or effect of unreasonably denying access to competitors. However, the platform may face several penalties if the government disagrees about the exigency of the relevant circumstances or scope of the action taken.

  • The civil penalties under this bill are severe: 15% of the total US revenue of the company for the previous year, or 30% uf the US revenue in any line of business affected or targeted by unlawful conduct during the period of unlawful conduct. 

  • The FTC may also seek restitution, rescission or reformation of contracts, refund of money, or return of property.

  • A court may require the CEO of a “repeat offender” covered platform to forfeit their compensation for the prior 12 months.

  • The statute of limitations is 6 years (2 years longer than the SOL in the Clayton Act).

  • The FTC may also seek a temporary injunction of 120 days from filing of the complaint, which a court must grant if the FTC proves there is a plausible claim of a violation and the violation impairs the ability of at least one company to compete with the covered platform.

  • Authorizes the FTC to establish rules and technical standards of interoperability specific to each covered platform.  Technical committees composed of market participants, academics, representatives of advocacy organizations, and NIST would advise the FTC in its development of interoperability standards.  

  • The bill also confers enforcement authority on the FTC and authorizes the FTC to recover civil penalties and other equitable monetary relief.

  • Importantly, as noted above, covered platforms would need to obtain pre-approval from the FTC in almost all circumstances before making any changes that may impact interoperability with no statutory deadline. This raises questions about whether the FTC would be able to complete its reviews in a timely and accurate manner so as not to chill innovation.

Ending Platform Monopolies Act, H.R. 3825 (separates lines of business)

  • The bill is sponsored by U.S. Rep. Pramila Jayapal (D-WA) and co-sponsored by Rep. Ken Buck (R-CO), Rep. Madison Cawthorn (R-NC), and Rep. Lance Gooden (R-TX)

  • Imposes structural separations by prohibiting a covered platform from owning a business that creates “a substantial incentive” for the covered platform to self-preference or disadvantage competitors.

  • Companies would have 60 days from their designation as a covered platform to complete the divestiture/termination of any prohibited affiliations.

  • This bill will make it illegal for a covered platform to own other business lines if that provides the platform with some incentive to advantage these other business lines.
 
  • Dictating and limiting the lines of business that a “covered platform” can compete in would hurt innovation and competition.

  • Adopts Section 8 of the Clayton Act’s prohibition against interlocking directorates by precluding individuals from service as an officer, director of a covered entity and a formerly affiliated company. The statute extends the Clayton Act’s coverage beyond officers and directors by preventing employees from working for a covered platform and a former affiliate.

  • Companies as well as “any individual who is an officer, director, partner or employee” of the company will face hefty fines of 15% of total average daily U.S. revenue of the company or 30% of the total average daily U.S. revenue of the affected or targeted business line if they violate the measure. Note that this is a departure from other bills with a 15% or 30% fine provision, which uses annual rather than daily revenue.

  • Remedy: The AAG or the commission may seek, and the court may order, disgorgement of any unjust enrichment that a covered platform obtained as a result of the violation that gives rise to the suit.
 
  • A violation of the Act also constitutes an unfair method of competition under the FTC Act, which will allow the Commission to create additional rulemaking related to the behavior targeted in the Act. 
 
Merger Filing Fee Modernization Act, H.R. 3843
 
  • This bill is sponsored by U.S. Rep. Joe Neguse (D-CO-02) and co-sponsored by Rep. Ken Buck (R-CO), Rep. Victoria Spartz (R-IN), Rep. Chip Roy (R-TX), Rep. Madison Cawthorn (R-NC), and Rep. Lance Gooden (R-TX).

  • It is the companion House bill to the Merger Filing Fee Modernization Act of 2021 (S. 228) introduced by Sens. Amy Klobchuar (D-MN) and Chuck Grassley (R-IA), which unanimously passed the Senate Judiciary Committee on May 13.

  • Changes filing fees paid by merging parties submitting notifications under the Hart-Scott-Rodino Act. Lower value transactions will initially have lower filing fees than the static fees currently assessed, but the proposed fees will be adjusted annually based on the Consumer Price Index and may quickly exceed current filing fee amounts.    

  • The filing fees contemplated for large transactions are many multiples of the current fees; current fees are static and range from $45,000 to $280,000 based on transaction value, while the proposed fees in this Act are adjusted annually and range from $30,000 to $2.25 million.  

  • The bill would also authorize $252 million for the DOJ Antitrust Division and $418 million for the FTC for fiscal year 2022. These are increases from the agencies’ current budgets of $184.5 million and $351 million, respectively. 

  • The bill would not only direct additional resources to the Antitrust Division of the Department of Justice and the Federal Trade Commission, but also does not constrain what the agencies could use these additional resources for.

  • As a result, the agencies will receive larger budgets without any Congressional oversight of additional enforcement actions.
House Antitrust Bills: General Notes on the 6/21 Proposed Amendments in the Nature of a Substitute

  • While most of the proposed revisions to the various House bills are largely minor corrections and neutral in effect, some proposed revisions are net negatives which, for example, expand agency authority, increase penalties, and make it virtually impossible to have the agency-determined “covered platform” designation removed. 

  • Overall, the revisions proposed in the substitute bills do not cure the major problematic provisions, and introduce uncertainty in particular definitions and other provisions, as noted below. The primary bills still do away with the principles and standards of the longstanding consumer-welfare standard in favor of a competitor welfare approach that the antitrust laws are not designed to advance. 

  • Note: None of the amendments cure this major underlying issue. Instead, they push the bills even further in the other direction in what is yet another eleventh hour attempt to circumvent scrutiny. 


Nadler Substitute for H.R. 3825 (Ending Platform Monopolies Act) 

  • There are multiple substantive changes to this bill; namely, there is an imposition of a severe penalty on individuals employed by covered platforms, and a removal of the time period set for termination of a business line under the Act. Other amendments are neutral and non-substantive.  

  • The amendment strikes the prohibition on a covered platform operator having a “beneficial interest” in a business line that utilizes the platform or otherwise creates a (broadly defined) conflict of interest with business users of the platform. This is a neutral development. Even with this change, the proposed bill still prohibits a covered platform operator from “controlling” (or owning) a business line that utilizes the platform or creates a conflict of interest, and the definition of “control” under the proposed bill is so expansive—e.g., including minority ownership positions—that the law still severely restricts investment and collaboration opportunities for covered platform operators.  

  • For violations by individuals, the amendment adds a fine equal to 15 percent of an individual’s daily wages and other compensation, as averaged over a year, for each day of a violation. This is a severe penalty that would impose significant financial hardship on individuals and could inhibit innovative companies’ ability to recruit and retain talented employees.  

  • The amendment removes a hard cap on the number of days—previously set at 60—a covered platform operator has to “terminate” a business line that utilizes its platform or otherwise creates a conflict of interest with business users. In lieu of a hard cap, covered platform operators would now need to “terminate” offending business lines “as soon as practicable.” This is perhaps a neutral development. On the one hand, the removal of a hard cap may permit covered platform operators more time to properly (and securely) wind down a business or find an appropriate buyer for an offending business. On the other hand, without some target for a “termination” date, overzealous enforcers could force terminations in far less than 60 days, leaving consumers vulnerable to service disruptions, including complete loss of service.  


Nadler Substitute for H.R. 3849 (Augmenting Compatibility and Competition by Enabling Service Switching Act – ACCESS Act) 

  • The proposed revisions to this bill are a net negative that create more hurdles for covered platforms, add uncertainty regarding any required divestiture process, and extend individual liability.
  
  • Under the amendment, many of the access-related obligations will now apply to all “business users” instead of users from “competing businesses or potential competing businesses.” This could drastically increase the universe of entities and individuals receiving sensitive technical information—e.g., information on interoperability—which would increase the risk for data security and privacy breaches.  

  • The amendment adds additional, unnecessary hurdles to remove a “covered platform” designation. Specifically, to remove a designation, a covered platform operator would now need to secure the concurrence of the non-reviewing, sister antitrust agency—e.g., DOJ would need to concur with the removal of a designation by the FTC.  

  • Under the amendment, for alleged repeat offenses by a covered platform, reviewing courts must consider stripping all corporate officers of their entire annual wages and other compensation as a deterrence measure. In the unamended bill, this provision applies only to chief executive officers. This extremely draconian remedy could inhibit companies’ ability to recruit and retain talented leaders.  


Nadler Substitute for H.R. 3816 (American Choice and Innovation Act) 

  • The proposed revisions to this bill are a net negative. While the new version affirmatively carves out actions taken to protect copyright or trademark and service mark interests, other changes which extend potential liability and remedies wipe out this neutral addition.  

  • The name of the bill would be changed to “American Innovation and Choice Act.” The new version also seeks to amend the title to read as follows: “A bill to provide that certain discriminatory conduct by a covered platform operator shall be unlawful, and for other purposes.”  

  • In Section 2(c) (the Affirmative Defense section), the new version removed the language regarding the CFAA. However, this language was moved to Section 7 (the Rule of Construction section).

  • In Section 2(e) (Removal of Covered Platform Designation), there is newly added language requiring both antitrust agencies to agree to the designation removal. This requirement for “sister agency concurrence” was in the previous version of the Ending Platform Monopolies bill but not the previous version of the American Choice and Innovation Act. It would likely make removal of a designation more onerous as it creates additional, unnecessary hurdles to remove a “covered platform” designation.  

  • In Section 2(f) (Remedies), the new version:  

  • Added disgorgement and injunctions as available remedies for State Attorneys General.  
  • Extends conflict of interest allowing court to order a divestiture to lines of business that the covered platform operator owns or controls (original language was drafted as covering only lines of business “operated” by the covered  platform). 

  • Extends the salary forfeiture provisions for repeat offenders from just the CEO of a covered platform to also cover “any other corporate officers as appropriate to deter violations of this Act.” 

  • In Section 2(g) (the Definitions section), the new version now covers information given to a covered platform by any business user as opposed to information given to a covered platform from any competing or potentially competing business. The removal of the “potentially competing” language is unobjectionable.  

  • In Section 2(h) (the Enforcement section), the new version now clearly enumerates enforcement powers for State Attorneys General based on the Sherman Act and Clayton Act. 

  • In Section 3 (the Judicial Review section), the new version allows for appeal of a decision in response to a request to remove a covered platform designation. This was likely a clarification to meet generally accepted due process requirements.  

Nadler Substitute to H.R. 3826 (Platform Competition and Opportunity Act of 2021) 

  • The proposed revisions to this bill are mostly neutral, but the addition of explicit provisions for suits by state Attorneys General is a notable development. Combined with the State Antitrust Enforcement Venue Act, the amendment ensures that covered platforms would be open to lawsuits brought by individual State AGs across dozens of venues for the same underlying conduct brought under this Act.
  
  • In Section 3(d), the amendment to the user threshold paragraph now captures “monthly active users on the online platform operator” rather than “on the online platform.” This amendment is not carried across the other bills and could be an error, but could also indicate a plan to tie user thresholds not just to the covered platform but to the covered platform operator. 

  • In Section 3(h) the “online platform” definition is amended in two ways: 1) the list of what constitutes an online platform changed slightly to remove online operating system, which should not have a significant impact on the potential designations; and 2) the facilitation paragraph was edited to read “controlled by the platform operator” rather than “controlled by the platform.”

  • The amendment to Section 4(b) expands the de-designation criteria for a covered platform to allow for de-designation where the criteria in Section 3(d)(2) – the user thresholds, market cap, and critical trading partner definition – are no longer met, rather than limiting de-designation to the critical trading partner definition alone. This amendment appears to correct a possible error in the initial draft of the bill.

  • Section 5 now clearly enumerates enforcement powers for State Attorneys General based on the Sherman Act and Clayton Act. It also creates separate enforcement paragraphs for the FTC and DOJ that do not appear to substantively alter the provision. This amendment is a negative development.  

  • Other amendments do not impact the substance 

Nadler Substitute for H.R. 3834 (Merger Fee Modernization Act)  

  • No changes that will impact substance.  

  • The only change is to the title of the Act

Nadler Substitute to H.R. 3460 (State Antitrust Enforcement Venue Act of 2021

  • The amendment does not make substantive changes to the bill
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