Last month I had the opportunity to help organize a CLE webinar with the New York State Bar Association on the topic of a new Senate legislation, the Anticompetitive Exclusionary Conduct Prevention Act (AECPA). The discussion was led by leading antitrust academics and practitioners: Seton Hall Law’s Marina Lao, NYU Law’s Harry First, Lowey Dannenberg’s Barbara Hart, Norton Rose Fulbright’s Robin Adelstein, and Debevoise’s Erica Weisgerber. The speakers raised several insightful points about the bill, which is seen as a response to growing concerns that the modern digital economy has provided unique opportunities for monopolistic conduct: a dominant player, for example, may easily use its prominent online platform to exclude small or potential rivals through exclusive dealing and the use of big data, thereby harming both competitors and consumers (to learn more about this topic, I recommend reading the American Antitrust Institute’s Interview With Antitrust Expert Jonathan Baker). The speakers also discussed questions including gaps in antitrust enforcement and whether or not this bill was the best vehicle to address those. One subject, however, stood out for me: the bill’s silence on the potential abuse of mandatory arbitration provisions in monopolists’ contracts.
In 2013, the US Supreme Court ruled in Amex v. Italian Colors that arbitration clauses could be upheld despite plaintiffs’ costs exceeding potential recovery and reasonably plausible claims that Amex used its monopoly power to violate antitrust laws. In that case, a group of merchants initiated a class action against Amex for forcing merchants to accept credit card rates that were approximately 30% higher than other credit cards’. And Amex was able to do this, they alleged, only through its monopoly power in the market for credit cards. The ruling was not just a setback for the merchants; it empowered market players with monopoly power to use confidential proceedings with arbitrations to avoid accountability, transparency, and class actions. This is the type of conduct that legislation in the spirit of AECPA should seek to address, but the bill looks elsewhere to address monopolistic conduct. For example, it appears to lower the burden in showing market power and antitrust injury. While this is laudable, the pleading standard for antitrust claims has not been the issue, according to long-time antitrust practitioner Barbara Hart. By “relaxing” the standard, the bill may be seen as fixing a problem that does not exist. Instead, it overlooks a large loophole: the threats that abuse of mandatory arbitration clauses presents. If the bill passes in its current iteration and does not address the Amex decision, consumers will continue to have a difficult time vindicating their rights and holding Big Tech accountable. Indeed, the spirit of the bill is better fulfilled by granting consumers broader avenues to vindicate their rights outside of courtrooms rather than touching up current, unbroken ones in the litigation context.
Consumers may not be the only ones at a disadvantage. As previously suggested, third-party competitors or sellers on Amazon or Apple’s App Store, for example, may also find themselves with limited options for relief when faced with anticompetitive practices in their respective online marketplaces. Recent government enforcement actions against Big Tech suggest that some companies may have been unfairly acting as both pitchers and umpires in their own game. With these actions, and as the pandemic threatens to consolidate the economy, we need tools that help consumers and competitors hold large players to account, not empower their further expansion and entrenchment.