[Editor’s note: This story originally was published by Real Clear Markets.]
By Doug McCullough
Real Clear Markets
This week, companies from around the world are virtually participating in the 2021 South by Southwest. Start-up and emerging companies not only want to tell the world about their innovative products, but they want to impress would-be investors who might fund their growth.
But there is a new threat to the start-up ecosystem. Recently Senator Amy Klobuchar (D-MN) introduced a bill that would weaponize antitrust law against big companies, thereby creating tremendous disincentives for large companies to acquire other companies, including pre-revenue start-ups and emerging enterprises. The bill may sound like it helps small businesses at the expense of big companies. However, the unintended consequence is that the bill would make it more difficult for early-stage companies to attract necessary growth capital.
Klobuchar’s bill introduces new, vague legal standards coupled with extraordinarily punitive penalties that will make big tech companies think long and hard before engaging in acquisitions.
In a stark departure from current law that protects the welfare of consumers, the bill would introduce dizzyingly broad concepts of protecting competitors and worse – potential competitors!
Applying antitrust law to the facts of the digital economy is already complicated. Klobuchar’s bill would make antitrust more incomprehensible by outlawing practices that have the potential to harm potential competitors.