Democratic Lawmakers Renew Calls For A Merger Ban During the COVID-19 Pandemic


On May 13, 2020, Senators Elizabeth Warren (D-MA) and Amy Klobuchar (D-MN) and Representative David Cicilline (D-RI) signed a letter to the Federal Reserve and the Treasury Department asking the Fed and the Treasury to restrict large corporations that received coronavirus pandemic funds from engaging in mergers. The letter did not contain the specifics of the restrictions could look like, but the goal would be to stop large corporations from taking advantage of pandemic to reduce competition.

This is the second push by Democratic lawmakers for a COVID-19 related merger ban. The first attempt began with Rep. Cicilline, the House antitrust subcommittee chairman, on April 23, 2020, warning that large companies and investors could take advantage of the pandemic and erase any competition smaller companies posed. On May 5, 2020, 12 representatives, led by Rep. Cicilline, wrote to House leadership requesting a merger ban be included in the next stimulus bill.

In between Rep. Cicilline’s April 23 statement and the May 5, letter, Sen. Warren and Rep. Alexandria Ocasio-Cortez (D-NY) announced they would be introducing legislation dubbed the Pandemic Anti-Monopoly Act. On April 28, 2020, Sen. Warren and Rep. Ocasio-Cortez released a press release stating plans to introduce the Act, which would “impose a moratorium on risky mergers and acquisitions – and stop large corporations from exploiting the pandemic to engage in harmful mergers and strengthen the federal government’s ability to respond effectively to future crises.”  https://www.warren.senate.gov/newsroom/press-releases/warren-ocasio-cortez-to-introduce-pandemic-anti-monopoly-actread-one-pager-here.

The Act, as currently proposed, would stop all M&A activity from companies that meet at least one of four criteria and the ban would last until “the Federal Trade Commission (FTC) determines that small businesses, workers, and consumers are no longer under severe financial distress.” https://www.warren.senate.gov/imo/media/doc/Merger%20Moratorium%20One%20Pager.pdf.

The May 13 letter differed from the previous angle in the legislation would not need to be passed in order for the merger ban to take effect. The Fed and the Treasury have the authority to place restrictions on the pandemic funds they give out, and therefore could place a merger ban on companies receiving funds. However, it seems unlikely to go forward as the Democratic proposals have not resonated with Republicans or the White House.
 

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