In the last few years, legislators have proposed several bills to address Big Tech “monopolists.” Sen. Amy Klobuchar (D-MN) has led the charge, introducing the Platform Competition and Opportunity Act and the American Innovation and Choice Online Act (AICOA). These bills, as well as other similar proposals, have garnered criticism for presuming that “big is bad” and creating an environment that punishes success. While senators like Mike Lee (R-UT) have explicitly disavowed policies that punish firms for their size, his Tougher Enforcement Against Monopolists (TEAM) Act enshrines size-based presumptions about monopolies.
In his 15-minute speech introducing the TEAM Act, Lee criticizes previous antitrust legislation. He claims these bills give the government too much power and that “responding to Big Tech with Big Government is adding insult to injury.” Continuing along this line, he specifically calls out those who seek to implement a “big is bad” policy, asserting that to imply size is all that matters in decision-making is “both unserious and economically illiterate.” He goes so far as to propose codifying the Consumer Welfare Standard and praises its contributions to antitrust regulation.
Despite Lee’s overtures to size-neutral and consumer-focused policy, the substance of the TEAM Act would give regulators the tools to overlook consumer interests in efforts meant to punish large firms.
Under the TEAM Act, all mergers resulting in a market share of over 33 percent will be presumed unlawful. A rebuttal would give the merging companies a chance to demonstrate that the anticompetitive effects of the merger either do not increase or are outweighed by the procompetitive benefits. On the other hand, if the merger results in a market share of over 66 percent, the action is assumed unlawful and no rebuttal can be issued. Despite its far-reaching implications, this aspect of the bill was not mentioned in Lee’s introduction speech.
Measuring market share ultimately comes down to the market definition, which consists of all relevant alternatives to the firm in question. Definitions can vary and, depending on the biases of the regulators, can lead to wildly different measurements of market share. A narrow market definition could easily put a proposed merger past the 66 percent threshold. Recent cases have shown a willingness by the courts to allow for such narrow market definitions, which, if coupled with the passage of this bill, would result in currently lawful mergers being deemed unlawful simply due to their size.
Lee makes it clear that he’s not interested in targeting firms simply for their size. Despite this claim, his bill would do precisely that. Given that regulators have shown a willingness to define markets narrowly if it suits their interests, it may affect mergers that aren’t as large as one might expect. In a recent complaint against Microsoft’s acquisition of Activision Blizzard, the FTC used an exceedingly narrow relevant market of just two game consoles, the Xbox X|S and the PlayStation 5. If regulators are allowed to proceed, regulatory agencies could win future cases simply by defining the market narrowly enough, eliminating any consideration for consumers, as has historically been the standard.
The TEAM Act presents itself as a consumer-focused alternative to the “big is bad” bills being proposed by Lee’s colleagues. The devil is often in the details, and if the TEAM Act passed without amendment, it would enshrine that “big is bad.”