Republicans said that Democratic efforts to block most corporate mergers during the pandemic would have catastrophic effects and are emblematic of “latent socialism.”
House Judiciary Committee antitrust panel Chairman David Cicilline, a Democrat from Rhode Island, is pushing for a temporary stop to most business mergers until the pandemic ends in order to avoid a “buying spree” from bigger companies, which could squelch competition in the long run.
Republican members of the antitrust subcommittee expressed their opposition in a letter to the Justice Department and the Federal Trade Commission this week, according to Politico.
“Unfortunately, these ideas are part and parcel of the latent socialism embraced by many modern Democrats, which represents an existential threat to America’s economic superiority,” the Republican members wrote in the letter.
The incident is part of a split among members of the House Judiciary Committee, which is carrying out a yearlong investigation into alleged anti-competition problems in the tech industry.
Democrats are redoubling their efforts and sent the Treasury Department and the Federal Reserve their own letter asking to stop big companies that are receiving coronavirus relief funds from participating in mergers.
“To protect small businesses and their workers, and to ensure a functioning, competitive economy as we emerge from this crisis, we urge you to use your broad authority and discretion to restrict large companies that receive taxpayer-subsidized bailout funds from engaging in mergers and acquisitions,” Sens. Elizabeth Warren and Amy Klobuchar and Cicilline wrote in a letter to Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.
The Democrats cited studies finding that corporate concentration has risen in the last 40 years with price markups up by an average of 42%. They also cited evidence that recent mergers and acquisitions have led to thousands of layoffs, such as the Disney-21st Century Fox merger or the T-Mobile-Sprint merger.
Republicans on the House antitrust panel oppose Cicilline’s moratorium against mergers during the crisis because it would “reduce flexibility that American businesses have in deciding how to best access capital.”
“Such flexibility is vital, especially during and in the wake of economic crises. With companies struggling to survive, it makes no sense to deny them a primary way to access cash — especially when there may be limited alternatives available,” the Republican lawmakers wrote in their letter to the DOJ and FTC.
