Antitrust Laws in New York: Is the Big Apple going Big Brother on Big Tech?

Lawmakers in the State of New York, in their concerns over business antitrust irregularities, demonstrate their intention to better scrutinize commercial practices of corporate entities by introducing the Senate Bill S8700A. In particular, the Bill was introduced by Michael Gianaris who represents New York's 12th State Senate district. The legislation is currently being reviewed by the Consumer Protection Committee Senate, and when, and if, enacted, the Bill will be titled as the Twenty-First Century Anti-Trust Act.

As it was introduced following a somewhat emblematic congressional hearing of the world’s biggest four tech giants - Amazon, Apple, Facebook, and Google – over allegations of the anticompetitive nature of their business practices, the Bill is undoubtedly worthy of discussion.

A Modern Approach to Antitrust Regulations

The man behind the “change”, Senator Gianaris, stated in an interview that the current antitrust legislation is archaic and fails to operate effectively to regulate markets in a modern economy. Particularly, the business model of big tech business, though it might not have the practical effect of limiting competition directly in the primary market, might have that effect indirectly in secondary markets. Yet on an application of the law, they are deemed to be operating within the legal boundaries. In other words, the way in which these big tech companies interact with the competition is very different from how General Motors would.

Essentially, the legislation aims to bring about noteworthy amendments with regards to the general business law, namely those concerning the establishment and maintaining a monopoly, or other forms of encumbering of trade. Furthermore, it offers a statutory basis authorizing class action lawsuit in New York. This would overturn the current rule of law set in Sperry Crompton pursuant to which treble damages provided for in Section 340 of the Donnelly Act are not recoverable in a class action n New York as they were described to be of punitive rather than compensatory nature. The time limit for bringing an action to recover respective damages is 4 years from when the cause of action has accrued, or from when the injury or damage was discovered. Moreover, the system of penalties will also be updated, therefore a violation of competition law will amount to a class C felony fineable up to $1 million instead of $100,000. The maximum imprisonment time provided by the Bill is 5 years.

The text of the Bill presents the motivations and reasons behind it stating that while large corporations continue to accumulate and concentrate vast amounts of power in their hands, the current legislation fails to offer effective protection to consumers and small businesses. It identifies a gap in the law, namely the requirement that a monopoly shall be established and identified on grounds of a conspiring contract or agreement between two or more players. As such, the legislation is deemed ineffective for it fails to capture the reality that competition can be equally strained through unilateral practices. Therefore, the Bill proposes that behaviour that amounts to ‘mere attempts’ to eschew competitiveness of the markets should be indictable.

For purposes of clarification, it shall be mentioned that the proposed provisions are not be applied to cooperatives, whether corporate or not, of farmers, gardeners, or dairy-men, including livestock farmers and fruit growers, and neither to agreements made thereby. Similarly, marine insurers are to be exempt from these legislative changes.

Taking Stock

At present, in the State of New York, the so-called 1899 Donnelly Act provided for in Article 22 of the General Business Law of New York (consolidated) is the main antitrust legislation. At the federal level, there are three main pieces of legislation governing antitrust laws in the United States at the federal level: the 1890 Sherman Act, and the 1914 Federal Trade Commission Act and Clayton Act. Notwithstanding the amendments that the legislation has been subjected to over the years, anticompetition laws as originally enacted are over a century old, and there is a somewhat widespread agreement that they are not fit for purpose in the age of digital economy. The New York State Attorney herself endorsed the initiative of reforming the law in hopes that it will further align with measures available at the federal level, namely providing for antitrust behaviour rising from unilateral acts, increasing penalty measures, and setting the basis for a novel class action lawsuits. In sum, if the Bill is successfully enacted it will unquestionably set a new standard of antitrust regulations in New York and will bring big tech corporations under more stringent and rigorous legal scrutiny.