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Law360 (April 23, 2020, 5:55 PM EDT ) House antitrust leader Rep. David Cicilline announced on Thursday that he's pushing for a temporary moratorium on merger activity to be included in the next stimulus bill.
Rep. David Cicilline, D-R.I., is calling for a moratorium on mergers while the coronavirus pandemic persists. (AP)
"Mega-mergers and corporate takeovers that were permitted during the last economic crisis led to the firing of millions of workers, the slowing of investment and innovation, and huge increases in executive compensation," Cicilline said.
"As we respond to the current crisis — with millions of Americans facing unemployment and millions of businesses in severe economic distress — we cannot afford to repeat this mistake," he added.
The proposal, which he's looking to roll into the relief package dubbed CARES 2, following the Coronavirus Aid, Relief and Economic Security Act, would put a moratorium on all transactions that do not involve firms that are failing or in bankruptcy.
"Our country can leave room for merger activity that is necessary to ensuring that distressed firms have a fresh start through the bankruptcy process or through necessary divestitures while also ensuring that we do not undergo another period of rampant and unhealthy consolidation," he said.
Cicilline said on Thursday that "several of my colleagues" had also signed onto the effort but didn't specify which legislators were on the roster.
A spokesperson for the lawmaker they will be releasing more details on the proposal in the coming days.
"We should not let massive corporations take advantage of this crisis," Cicilline said in a tweet on Thursday.
Open Markets Institute, which advocates for strong antitrust enforcement, lauded the legislation.
"The principles of the chairman's proposed plan are imperative to the recovery of the economy," said Sandeep Vaheesan, legal director of the organization. "Financially, independent businesses are having a tough time right now."
However, the president of online business trade group NetChoice, whose stated goal is to protect internet businesses from overregulation, railed on the bill as simply a way for Cicilline to accomplish "his outdated antitrust agenda" rather than "protecting American jobs."
NetChoice President Steve DelBianco argued in a statement that, "mergers and acquisitions are necessary tools to save jobs, businesses, and investments in innovation" during a crisis.
"If enacted, Chairman Cicilline's proposal would leave small businesses with no choice but to fire their employees and declare bankruptcy," DelBianco said.
--Editing by Nicole Bleier.
For a reprint of this article, please contact reprints@law360.com.
