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Law360 (May 13, 2020, 6:54 PM EDT ) Large corporations that receive coronavirus relief aid should have to promise they won't leverage the pandemic into an opportunity to scoop up struggling businesses, three lawmakers told the heads of the Federal Reserve and the U.S. Department of the Treasury on Wednesday.
The agency and the Fed should flex the muscles given to them under the coronavirus rescue package and attach strings to any aid doled out under the legislation — strings that would restrict businesses from undertaking any mergers that might be bad for competition, the Democratic lawmakers said in a letter.
The proposal comes from two former presidential hopefuls, Sens. Elizabeth Warren, D-Mass., and Amy Klobuchar, D-Minn., as well as House antitrust subcommittee head David Cicilline, D-R.I.
"As small businesses struggle to stay afloat, they have become potential targets of large corporations seeking to exploit the crisis to increase their market power," the lawmakers wrote. "Small businesses help form the backbone of our economy, yet giant corporations are benefiting most from this bailout."
The lawmakers didn't lay out exactly what those restrictions would look like, but they did urge the Fed and the Treasury Department to step in quickly and use "their full authority to ensure that predatory corporate behavior during the pandemic does not make our long road to recovery even more painful."
This isn't Warren's first proposal aimed at stopping economic concentration sparked by the pandemic from dampening competition. In late April, the senator announced she was teaming up with Rep. Alexandria Ocasio-Cortez, D-N.Y., to craft the Pandemic Anti-Monopoly Act that would put a moratorium on any mergers that need to be reported to federal agencies for antitrust review.
The merger embargo would last until the Federal Trade Commission "unanimously determines that small businesses, workers and consumers are no longer under severe financial distress."
But this latest attempt wouldn't require legislation, if the lawmakers can convince Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin to use their authority to place conditions on the funds set aside for business aid during the pandemic.
An unlikely feat, considering the reaction that the merger embargo sparked, both from within the administration and on the right side of the aisle.
The U.S. Department of Justice's antitrust chief Makan Delrahim told CNBC on Wednesday that the attempt seemed "misguided." His comments came the same day that six Republican congressmen — most of whom sit on the House's antitrust subcommittee — sent a letter to the DOJ and the FTC calling the proposal "dangerous."
--Additional reporting by McCord Pagan. Editing by Nicole Bleier.
For a reprint of this article, please contact reprints@law360.com.
