Although much attention recently has been focused upon debates in Congress, potential legislative changes to U.S. antitrust law are not limited to proposals at the federal level. Many states are considering changes to their own antitrust laws, which usually can be enforced by state attorneys general and private plaintiffs. Importantly, New York legislators have introduced two bills that propose sweeping changes to the State's antitrust law, the Donnelly Act, building on measures introduced in New York's last legislative session.
These proposals, if enacted, would make New York's single firm conduct statutory provisions the most aggressive in the United States and would give the New York Attorney General a more prominent role in reviewing transactions—including by creating a first-of-its-kind state merger notification requirement. These changes would allow New York's antitrust law to reach a range of conduct not actionable under any existing federal or state antitrust law, and would introduce European-style antitrust standards to New York. Accordingly, this reform would create considerable new compliance challenges and risk for companies potentially subject to New York antitrust law, whether or not those companies are located in New York.
Other U.S. states and territories are considering antitrust law changes, but the New York proposals are the most significant. Although much of the conversation concerning developments in antitrust law has focused on "Big Tech" companies, these proposals would affect businesses across all sectors of the economy. This alert discusses these legislative proposals and key implications for businesses.
Overview of New York Antitrust Legislation
In January 2021, New York State Senator and Deputy Majority Leader Michael Gianaris (D-12th District) reintroduced the 21st Century Antitrust Act (S933), seeking changes to New York's antitrust law that are more sweeping than those proposed in a version of the bill introduced in 2020. The revised legislation would:
- Prohibit unilateral conduct that creates or maintains a monopoly—similar to Section 2 of the Sherman Act.
- Create an unprecedented (in the United States) "abuse of dominance" offense, based on European law, and give the New York Attorney General rulemaking authority to carry out the provision.
- Require merger notifications to the New York Attorney General at least 60 days prior to consummation for transactions that result in the acquirer holding more than $8 million in assets or voting securities of the target—the first state-level merger reporting requirement in the United States.
- Authorize significantly higher fines for violations of the Donnelly Act.
- Authorize parens patriae actions by the New York Attorney General on behalf of injured individuals and businesses for violations of the Donnelly Act, as well as private class actions.
New York Attorney General Letitia James testified in support of the prior version of the bill in a hearing before the Senate Consumer Protection Committee, stating that "it will give New York's antitrust laws the scope and the flexibility needed for effective antitrust enforcement in this era of increasing economic concentration."
In late January Assemblyman Ron Kim (D-40th District) proposed A3399, an equally extensive rewrite of the Donnelly Act.1 In addition to prohibiting abuse of dominance, the Assembly bill would bar mergers under language that parallels Section 7 of the federal Clayton Act2 and would impose on the merging parties the burden of showing that the procompetitive benefits of the transaction outweigh any anticompetitive effects.
Analysis of Significant Proposed Changes
- European-Inspired "Abuse of Dominance" Offense
The Donnelly Act does not contain an analog to Section 2 of the Sherman Act, which prohibits single firm conduct that creates or maintains monopoly power. Senator Gianaris' proposal would amend the statute with language that is similar to Section 2.3 However, the proposal would go substantially further than federal or any other U.S. state's law in addressing single firm conduct; it would prohibit companies "with a dominant position in the conduct of any business, trade,  commerce [or service]" from "abus[ing] that dominant position."
1 Assemblyman Jeffrey Dinowitz (D-81st District) has introduced in the State Assembly the same version of the 21st Century Antitrust Act introduced last session (A1812).
2 The bill mirrors language in the Clayton Act that prohibits certain transactions where the effect "may be substantially to lessen competition, or to tend to create a monopoly." See 15 U.S.C. § 18.
3 See 21st Century Antitrust Act. S933, introduced on Jan. 6, 2021, § 340.2.(a).(i).
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