ANTITRUST

Warren, Ocasio-Cortez Call For Temporary Ban On M&A Due To COVID-19

Warren, Ocasio-Cortez Call For Ban On M&As

Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez are the latest Democrats to call on the administration to place a moratorium on mergers and acquisitions (M&As) during the COVID-19 crisis.

The lawmakers introduced the Pandemic Anti-Monopoly Act on Tuesday (April 28). If approved, the measure would curb M&As during the coronavirus pandemic.

“This legislation is desperately needed,” said Ocasio-Cortez in a statement. “Antitrust agencies have already admitted their capacity to review mergers is reduced by the crisis … If we don’t stop predatory M&As now, the actions of big corporations will have decades-long economic consequences for all of us. With less competition, the whole country will see job loss and higher costs for consumers.”

The bill, upon receiving congressional and White House approval, would prohibit such transactions until the Federal Trade Commission (FTC) determines that small businesses, workers and consumers are no longer under severe financial distress.

The moratorium includes all mergers and acquisitions that involve companies with more than $100 million in revenue or financial institutions (FIs) with more than $100 million in market capitalization. 

It would also prohibit the transactions by private equity companies, hedge funds or firms that are majority-owned by a private equity company or hedge fund, as well as companies with a patent that impacts the crisis, such as personal protective equipment (PPE).

Ocasio-Cortez said published reports have revealed private equity and other big businesses are seeking to buy smaller companies and consolidate for their gains. “These companies should be using their cash reserves to help their employees, not to acquire more power,” she said.

Warren said the bill is essential to prevent large corporations from exploiting the pandemic to engage in harmful mergers and strengthen the federal government’s ability to respond effectively to future crises. “As we fight to save livelihoods and lives during the coronavirus pandemic, giant corporations and private equity vultures are just waiting for a chance to gobble up struggling small businesses and increase their power through predatory mergers,” Warren said in a statement. “We’re introducing legislation to protect workers, entrepreneurs, small businesses and families from being squeezed even more by harmful mergers during this crisis and any future national emergency.”

Last week, House Antitrust Subcommittee Chairman David Cicilline called for a ban on mergers until the COVID-19 pandemic ends. “As millions of businesses struggle to stay afloat, private equity firms and dominant corporations are positioned to swoop in for a buying spree,” he told the Open Markets Institute, a Washington, D.C. advocacy group whose mission is to end corporate monopolies.

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Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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