$5bn+ Big Tech mergers in cross-hairs of draft US laws

Democrat-backed bills would also grant watchdogs powers to undo takeovers

A pair of law bills before the US House and Senate would give watchdogs stronger powers to block big mergers, and allow regulators to reach back into the past to dismantle previous M&As deemed to be harmful. 

Senator Elizabeth Warren (D-MA) and House Representative Mondaire Jones (D-NY) each sponsored a version of the Prohibiting Anticompetitive Mergers Act (PAMA) [PDF] for their respective halves of Congress. If passed into law, this would allow the FTC or Dept of Justice to block takeovers valued at over $5bn – so-called prohibited mergers – and give other regulatory powers to antitrust officials. 

While the tech industry isn't specifically named in the bill, there is little doubt where many mergers and acquisitions in the billions emerge. Warren makes no secret of her disdain for big tech and its business practices, and has threatened in the past to break up WhatsApp and Instagram-gobbling Meta (née Facebook), Amazon, Google and the like.

The House bill focuses on the shrinking number of companies wielding "too much influence over the US economy." 2021 was a banner year for M&As, with $5.1tr being spent over the course of the year. That's the most since 2015, and $3.8tr more than 2020. 

Like its House counterpart, the Senate bill [PDF] also prohibits mergers resulting in market shares of over 33 percent for sellers or 25 percent for employers, and bans deals "resulting in highly concentrated markets under the 1992 agency guidelines," according to a summary [PDF] of the red-tape.

Additionally, the proposed legislation allows antitrust agencies to outright reject mergers without a court order. It would also prohibit private equity roll up merger strategies, will require involving relevant state agencies, and moves merger litigation out of courts and into government agencies, in addition to stripping merger litigation from the Supreme Court's jurisdiction. 

Even previously approved mergers aren't safe: PAMA gives antitrust regulators the ability to retrospectively audit previous "harmful deals," and includes requiring agencies to retroactively inspect mergers that would now fall into the "prohibited merger" category. 

The draft legislation would further allow agencies to require breakups of previous mergers if they resulted in a market share above 50 percent, meet 2010 agency guidelines for a highly concentrated market, or if they "materially harmed competition, workers, consumers, or small or minority-owned businesses." It would also allow state attorneys general to sue to break up mergers deemed harmful. 

That puts a lot of big deals from the past year under the microscope, and it could mean a lot of breakups. The recent Amazon/MGM merger, valued at $8.4b, would have been prohibited, as would Microsoft's deal to buy Activision for $68.7bn. Ericsson/Vonage ($6.2bn), Google/Mandiant ($5.4bn), Oracle/Cerner ($28.3bn), Microsoft/Nuance ($19.7bn) and Salesforce's purchase of Slack for $27.7bn would all be subject to review, and possible breakup, under PAMA.

The likelihood that PAMA becomes law is probably slim: neither the Senate nor House bills have any Republican cosponsors, and the bills are unlikely to garner much bipartisan support. That may not be a problem in the House, but this deal is likely dead on arrival once Warren gets a chance to bring the matter to a vote in the Senate. ®