Socialist Leaders Look to Block Mergers

Senator Elizabeth Warren and Congresswoman Alexandria Ocasio-Cortez, two far-left legislators suspicious of corporate America, want to stop mergers during the pandemic. During this difficult economic time, they’re introducing legislation to prevent large companies from merging.

The Pandemic Anti-Monopoly Act, set to be introduced after Congress is back in session, would block mergers and acquisitions from companies with more than $100 million in revenue, financial institutions with a market capitalization of more than $100 million, or any other private equity or venture capital firm. Importantly, the bill would also prevent any merger activity involving companies with “an exclusive patent that impacts the crisis”.

“Mom and Pop Shops”

A hugely critical initiative to protect small biz, consumers & workers.

Foresight from @AOC⁩ & ⁦@ewarren⁩, teaming up on a “Pandemic Anti-Monopoly Act”—a moratorium on mergers and acquisitions involving large companies during the COVID-19 crisis. https://t.co/UbEe8sq8RM

— Kumar Rao (@KumarRaoNYC) April 28, 2020

The objective of the bill is to prevent a massive consolidation of companies and the buy-outs of struggling businesses. Difficult economic times are often big moments for buyouts, as larger firms purchase a majority stake in larger firms. Often, this is the only alternative to bankruptcy for struggling companies.

AOC and Elizabeth Warren view this as a time for predatory buyouts, although both parties naturally agree to such mergers. True to form, Alexandria Ocasio-Cortez announced the bill on Twitter with anti-Wall Street celebration, the word ‘biz’, and emojis.

“Now is the time to stand up for mom + pops & protect them from getting wiped out by Wall Street. That means checking mega corps from gobbling up small biz during a global crisis. @ewarren & I have the bill. A few bankers may cry about it, but something tells me they’ll live (shrugging emoji).”

In defense of the bill, a Warren said,

“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.”

Early Opposition

PREDATORY BENDER: As US Bank Regulators Rubber Stamp Mergers Opposed by Fair Finance Watch, Like Rogue Regulator Otting and Fed on Banco Bradesco — Now Proposed Pandemic Anti Monopoly Act https://t.co/K8U5mQ9tP6 pic.twitter.com/3ZT7Wet6uF

— Inner City Press (@innercitypress) April 29, 2020

The bill is already seeing opposition by lobbyists and lawmakers, and is unlikely to go far in the legislative process. One obvious issue with the bill is that it determines what is best for small companies, rather than allowing them to make the decision to merge with a larger entity. It also provides no additional financing for these companies, effectively taking away their lifeline without offering a different one.

NetChoice, a powerful trade group with members including Facebook and Google, was quick to criticize the proposed legislation.

“In hard economic times, often the only way to save a business and the jobs it provides is to seek investment from larger market players,” said Carl Szabo, vice president of NetChoice. “The bill’s effect would be to force businesses to go bankrupt rather than merge with a successful market player.”

Pressuring Biden

The White House, Republican-controlled Senate, and even the House of Representatives are unlikely to allow the bill through. Rather than pursuing passage, the more likely purpose of the bill is to pressure presidential candidate Joe Biden to come out in favor of it.

Since Bernie Sanders dropped out the race, Biden has steadily made more verbal concessions to the progressive wing of the Democratic Party. He acknowledged their frustration with establishment Democrats and promising to move further to the left. This bill is an opportunity to force Biden’s hand. If he supports it now, it could set a precedent for letting more liberal legislation through. This is likely if he wins the presidency.

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