Empowering States Won't Help Consumers
It is rare that attorneys general from all 50 states and 2 territories agree on anything.
Yet, that is exactly what happened after Congressional trust busters in the House and Senate introduced the State Antitrust Enforcement Venue Act of 2021 (H.R. 3460/S.1787). In their coalition letter, the attorneys general argued “states should accordingly be on equal footing with federal enforcers in deciding where, when, and how to prosecute cases.”
Just because attorneys general from every state and territory support the passage of a bill, does not mean it is a positive development for consumers. Unfortunately, the passage of the State Antitrust Enforcement Venue Act of 2021 could cause irreparable harm to consumers and force tech platforms, the principal target of this bill, into expensive lawsuits that will undoubtedly be felt by consumers.
When the federal government files an antitrust suit, it can select which court will hear the case. Most high profile cases, such as the Federal Trade Commission’s (FTC) suit against Facebook are normally handled by the U.S. District Court for the District of Columbia. Defendants are not able to have these cases transferred. This arrangement ensures the federal government “retains its home field advantage.”
Cases brought by states, however, are not afforded this arrangement and defendants can request cases be heard in a court of their choosing. Additionally, state lawsuits can be joined by other lawsuits brought by private plaintiffs. According to Representative Ken Buck (R-CO), the sponsor of the House bill, this arrangement has allowed big tech companies, with “nearly unlimited resources…to game the judicial system and shield themselves from legal and regulatory scrutiny.”
If the House and Senate pass the State Venue Antitrust Enforcement Act, antitrust suits brought by states would be treated the same as suits brought by the federal government, meaning attorneys general would be able to select the court that hears their antitrust suit. Senator Mike Lee (R-UT), co-sponsor of the Senate bill, claimed the bill will ensure “state antitrust enforcers on an equal footing” allowing them the same legal privileges afforded to federal enforcers.
Arguably the biggest problem with the State Venue Antitrust Enforcement Act is how it undermines the legal principle that everyone should be entitled to a fair trial. Allowing attorneys general to select the venue for their case will empower them to select venues that are particularly hostile to antitrust cases. This very fact would make it harder for tech companies to win their cases and force them into an onslaught of lawsuits they have little chance of winning.
For consumers, this likely means facing higher prices for services they currently enjoy for little or no cost as tech companies seek to raise revenues to cover these legal costs. In the first quarter of 2021, Facebook invested over $5 billion in research and development. Investments of this scale have allowed it to not only develop an app that has billions of users across the world, but also begin work on artificial intelligence and virtual reality.
However, facing more expensive lawsuits in hostile venues will force tech companies, like Facebook, to divert capital resources from innovation and onto fighting expensive antitrust suits that can run into the millions. For consumers, this means they will lose access to future innovation.
Facing higher legal costs, tech platforms will be less able to invest make the necessary investments in research and development that has allowed them to make truly innovative products and services.
Allowing state attorneys general to select a venue would also empower them to weaponize antitrust laws to serve political ends. Knowing they can select a friendly venue to hear their lawsuit, attorneys general will be more likely to bring frivolous lawsuits, alleging monopolization or anticompetitive behavior, when they are seeking to redress issues like perceived political bias.
Empowering state attorney generals to behave in this way not only undermines the very foundations of America’s antitrust laws, but it also undermines the very principle that everyone is entitled to equal protections under the law.
While advocates of the State Venue Enforcement Act claim it will ensure fairness, they fail to consider how the bill will empower attorneys general to weaponize antitrust laws to satisfy partisan desires and force big tech platforms into expensive lawsuits that will hamper innovation and potentially force them to charge for goods and services.
Recognizing the profoundly harmful consequences of this bill, Congress should reject it and work toward a regulatory environment that fosters innovation and legal equity.
Edward Longe is a Policy Manager at the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.org or follow us on Twitter @ConsumerPal.