Amending New York Donnelly Act – If at first you don’t succeed, try, try, and again
A proposed change to New York’s Donnelly Act was introduced earlier this month. It would significantly expand the scope of antitrust legislation enacted in the 1899. New York Senate Bill 335 titled “Twenty-First Century Anti-Trust Act”, seeks to modernize New York’s antitrust law to address “New York’s great concern about the growing accumulation power in the hands dominant corporations, which undermines the power workers, consumers, small businesses, and small business owners.” If passed, this would be one of the most aggressive state antitrust laws ever, and it’s arguably closer to antitrust jurisprudence within the European Union rather than in the United States Since at least the 2019-20 Legislative Session, New York Senate has introduced substantially similar versions of this bill. State Senator Michael Gianaris (of the 12th Senate District), together with other democrats, have introduced some version of this bill each year, and each year, it has passed the State Senate but failed to come up for a vote in the Assembly before the end of each session.
It is currently before the Senate Consumer Affairs and Protection Committee and proposes the following additions to the Donnelly Act.[1]Single-firm conduct and the “abuse of dominance” standard. Since 125 years ago, the Donnelly Act prohibited coordinated conduct between two or more parties that unreasonably restricted trade. It did not cover unilateral, single-firm behavior. SB 335 seeks to change that, not only by including a state law equivalent to Section 2 of the Sherman Act, but going beyond Section 2’s ban on monopolization (and attempted monopolization) to also address “abuse of dominance.”
Abuse of dominance, a standard applied for many years by the European Union in its competition laws, makes it unlawful for any single corporation or entity with a “dominant position” in a relevant market to “abuse” that dominant position. SB 335 defines “abuse” of dominance as the use of a dominant position to limit competition on a different market, such as refusing to deal or requiring exclusive deals, or tying together two separate products, if an entity has a market share greater than 40% as a buyer or seller. The bill also expressly prohibits abuse of dominance in labor markets, including restraints on workers’ mobility, freedom to disclose wage and benefit information, and wage discrimination based on undisclosed considerations.
Premerger notification and labor considerations. SB 335 also aims to implement the most comprehensive premerger program of any US State. Specifically, any transaction by a person doing business in the State which is reportable under the Hart-Scott-Rondino Antitrust Improvements (HSR) Act to federal antitrust agencies must simultaneously be submitted for review by the State attorney general.
SB 335 also requires the attorney general to consider each transaction’s effect on labor markets and workers, a consideration also expressly incorporated for the first time in the Department of Justice (DOJ) and Federal Trade Commission’s (FTC) most recent 2023 Merger Guidelines.[2]Expert witness fees. General Assembly Stay tuned here while we monitor developments on SB 335.
FOOTNOTES
E.g., Senate Bill 8700 (2019-2020 Legislative Session), available at NY S08700 | 2019-2020 | General Assembly | LegiScan; Senate Bill 6748 (2023-2024 Legislative Session), available at NY S06748 | 2023-2024 | General Assembly | LegiScan.
Since August 2023, healthcare transactions affecting New York must be reported to the State’s Department of Health under existing laws, N.Y. Pub. Health Law SS4550 et séq., but SB 335 aims to cover all transactions that qualify, not just healthcare.
