Congressional bill aims to ban mergers valued over $5 billion

Two US senators have introduced a bill that attempts to ban mergers and acquisitions valued over $5 billion, a move likely to hit the tech industry the hardest.

Senator Elizabeth Warren and representative Mondaire Jones introduced bicameral legislation aimed at stomping out rampant industry consolidation that allows companies to raise consumer prices and mistreat workers.

The bill, titled “Prohibiting Anticompetitive Mergers Act” (PAMA), would ban the biggest, most anticompetitive mergers and give the Department of Justice (DOJ) and Federal Trade Commission (FTC) the power to reject deals in the first instance without court orders and to break up harmful mergers.

Specifically, it would make “prohibited mergers” illegal, including those valued at over $5 billion or those that would result in market shares above 33% for sellers or 25% for employers.

Warren said that for the first time, the PAMA act would require the FTC and DOJ to consider how a merger would impact workers, and reject mergers that would harm them. It would empower the agencies to reject transactions that would exacerbate corporate domination of labour markets and block transactions that would weaken collective bargaining agreements, reduce employee benefits and compensation, or cause layoffs.

The legislation would also establish procedures for the antitrust agencies to conduct retrospective reviews and break up harmful deals that have destroyed competition.

“For the last five decades, big companies have had almost free reign over our economy, squashing competitors, growing bigger and bigger, and abusing their market power to price gouge consumers and crush workers and small businesses,” said Warren.

“This unconstitutional behaviour has to stop. My new bill with Rep. Jones would restore our country’s anti-monopoly tradition by banning the biggest, most anticompetitive mergers and giving the DOJ and the FTC stronger tools to enforce our antitrust laws and restore real competition in our markets.”

Warren mentioned the example of Amazon’s proposed acquisition of MGM Studios, reportedly worth around $8.5 billion, highlighting how she has called on the FTC to consider harms to workers and harms throughout entire business ecosystems as a result of this acquisition. Under the new legislation, this deal would be prohibited.

The tech industry, known for its eye-watering mergers, would likely be hit hardest if the bill ever became law.

Deals such as Microsoft's acquisition of Activision, valued at $68.7 billion, Google’s acquisition of Mandiant for $5.4 billion, Microsoft’s $19.7 billion acquisition of Nuance, and Intel’s acquisition of Tower Semiconductors for $5.4 billion would all have faced much tougher regulatory hurdles.