NY considers antitrust measure to curb power of corporate giants

ALBANY — A bill to strengthen antitrust laws first drawn up a century ago to break up steel, oil and railroad monopolies would be used to confront today’s high-tech corporations that the proposal’s sponsor says wield a new threat of "abuse of dominance."

But industry leaders warned in a legislative hearing Monday that the bill threatens free enterprise itself by exposing successful businesses and startups to lawsuits by competitors and criminal action by politically motivated attorneys general.

The bill sponsored by Senate Deputy Majority Leader Michael Gianaris would apply antitrust laws to companies such as Amazon, Facebook and Google that can’t legally be defined as monopolies, yet have commanding shares of a market. Monday’s sometimes heated debate between progressive lawmakers and trade groups included discussion of dominant hospital groups, pharmaceutical development and sales companies, and corporate farms.

The bill would provide stiffer civil and criminal penalties — some of which haven’t been increased for 45 years — for abuses of consumers through prices and quality of goods and services or abuse of workers in wages or conditions. The bill would empower the state attorney general’s office with a new tool for criminal and civil enforcement. The bill also would provide smaller, competing firms with more legal standing to sue the leaders of their field based on claims of abuse by market dominance.

"It’s about time we updated our laws here in terms of companies taking advantage of consumers," said Sen. Kevin Thomas (D-Levittown), chairman of the Consumer Protection Committee, which led Monday’s legislative hearing on the proposed bill.

The bill was endorsed by state Attorney General Letitia James, who enforces antitrust laws and consumer protections.

"We are handicapped, if you will, because of the limitations of the law … which I would argue is limiting and harming consumers and limits competition in the marketplace," James said.

Industry representatives, however, said the bill, patterned after new laws in Europe, would have a chilling effect on bringing high-tech companies to New York, retaining New York jobs in the growing field, and restricting the innovation economy nationally. They argued that "abuse of dominance" is too vague and could be twisted by an attorney general for political gain and by private lawyers representing less-successful competitors working for big payoffs.

Instead, they said existing laws and market forces should regulate abuses, such as inflated prices or shoddy quality under a free enterprise system that built the strong national economy.

Business advocates cited the beer industry, which has flourished in New York through innovative microbreweries, despite a few corporate beer manufacturers at the top of the national market.

Kathryn Wylde of the Partnership for City of New York said the bill would be a substantial departure in law especially as the economy seeks to rebound from the COVID-19 crisis.

"The proposed legislation would not be in the best interest of an economy struggling to recover," Wilde said.

She said the bill is vague in its definition of market dominance and the measure could be used against successful businesses that reached the top of a field by good faith and hard work and hurt startups creating a unique service or product.

Democratic legislators, consumer advocates and academics invited to testify disagreed.

"The ‘abuse of dominance’ standard does fill a very important loophole," said Tim Wu, a Columbia University professor, former state and federal antitrust regulator, and the 2014 candidate for the Democratic nomination for lieutenant governor. He said antitrust laws must be updated because the difficulty of proving a company is a monopoly has stifled investigation of clear market abuses.

Wu and others said abuse by dominant corporations can result in costs to society that include loss of privacy despite companies’ promises to protect it, false news reports carried by social media that further polarized politics, the disparity of wealth, and a rise in teen suicide from online bullying and shaming.

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.