WASHINGTON (Reuters) – The chair of the House Judiciary Committee’s antitrust panel on Thursday called for a moratorium on mergers in the next coronavirus stimulus package and a ban on deals that are not directly related to companies about to fail.
Democratic U.S. Representative David Cicilline’s proposal attempts to ensure that large companies do not wipe out competition from smaller rivals already hit hard by the pandemic.
Mega-mergers and corporate takeovers that were permitted during the last economic crisis led to the firing of millions of workers, the slowing of investment and innovation, and huge increases in executive compensation, Cicilline said during an event hosted by the Open Markets Institute, a Washington-based antitrust advocacy group.
“We must take immediate action to halt this trend by including a moratorium in the upcoming stimulus package on all transactions that do not involve firms that are truly failing or in bankruptcy,” Cicilline said.
He said there can be room left “for merger activity that is necessary to ensuring that distressed firms have a fresh start through the bankruptcy process or through necessary divestitures while also ensuring that we do not undergo another period of rampant and unhealthy consolidation.”
Cicilline’s comments come at a time when his committee is conducting an antitrust probe into tech giants including Amazon <AMZN.O> , Facebook <FB.O>, Alphabet’s Google <GOOGL.O> and Apple <AAPL.O>. That probe was set to end in March but has been delayed by the pandemic.
Any attempts to put changes like this in future stimulus bills would likely face fierce opposition from Wall Street banks, which earn big fees from merger and acquisition activity and the business lobbying groups which see mergers as a way to build businesses quickly.
(Reporting by Nandita Bose and Diane Bartz in Washington)