WHY HAS CALIFORNIA WAITED SO LONG TO ENACT ITS OWN MERGER REVIEW LAW?

By Abiel Garcia¹

While there is debate whether mergers and acquisitions ("M&A") benefit or harm the ultimate consumers, M&A activities are common practice in today’s world.² On the one hand, they can offer businesses the opportunity to expand their operations, achieve economies of scale, and increase productivity through technological and "back-office" synergies, which in theory results in lower prices and better products to consumers. On the other, M&A activities can negatively impact an economy by reducing competition in the marketplace—thereby raising prices on existing products or slowing innovation—or by eliminating jobs when streamlining a merged entity’s operations.

Over the past decade, mergers and acquisitions have exploded, both through traditional horizontal and vertical mergers, as well as private equity firm acquisitions.³ The Federal Trade Commission ("FTC") and Department of Justice ("DOJ") (together the "Antitrust Agencies") reported that in 2021, more than 3,520 M&A transactions were reported pursuant to the Hart-Scott-Rodino Act ("HSR") guidelines,⁴ almost 67% higher than the next highest year in the past decade.⁵ This does not account for the additional thousands of non-HSR reportable mergers and acquisitions that take place each year.⁶

As of today, the Antitrust Agencies are the only two U.S. competition entities that consistently receive and review premerger notifications and filings under the federal HSR guidelines.⁷ But it is no secret that the Antitrust Agencies are understaffed and are scratching the surface of potentially problematic mergers.⁸ Out of the 3,520 HSR-reported transactions documented in 2021, the Antitrust Agencies investigated less than 2% of them.⁹ This could be due to a variety of reasons such as resource constraints, political agendas, or the growing complexity and size of transactions that require scrutiny. Regardless of the reason, the Antitrust Agencies are limited in their ability to review a majority of the HSR-reported mergers.

In California, there is no state-law equivalent of an HSR Act, or any law containing the requirements set forth within the HSR Act that delineate how and when to file premerger notifications. While the California Attorney General and/or private parties can bring a merger challenge under federal law, such as section 7 of the Clayton Act,¹⁰ California

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should adopt its own state law equivalent—a law that empowers the California Attorney General to review and challenge mergers, while also granting California citizens the right to challenge mergers. As one of the top five economies in the world with progressive antitrust laws, a reputation for innovation, and a prohibition on noncompete clauses, California’s economy is prevalent with potential and nascent competitors that need a unique merger law. A state law that would allow the California Attorney General to review transactions that are under the federal HSR standards, that would allow the California Attorney General to review acquisitions of potential or nascent competitors by dominant incumbents, and that would reflect California courts’ broad interpretation of existing state law.

I. CALIFORNIA’S ANTITRUST LAWS ARE BROADER THAN THE FEDERAL ANTITRUST LAWS

"[T]he Cartwright Act is broader in range and deeper in reach than the Sherman Act."¹¹ "States have regulated monopolies and unfair competition for longer than the federal government, and federal law is intended only ‘to supplement, not displace, state antitrust remedies.’"¹² These California Supreme Court declarations, made 30 years apart, demonstrate California’s unwavering commitment to state antitrust law and California’s unique interpretation of it. Whether it be reverse payment analysis, resale price maintenance, or price gouging, California’s antitrust history is unique as "interpretations of federal antitrust law are at most instructive, not conclusive, when construing the Cartwright Act."¹³

Yet, for years, California and its state agencies have not had the independent ability to review mergers under California’s antitrust laws due, in part, to the California Supreme Court’s opinion in Texaco.¹⁴ In Texaco, the court stated that California’s Legislature "failed to include the latest invention of the evolving antitrust statues-an antimerger provision."¹⁵ The "Legislature’s inaction on this subject for the past 80 years is significant."¹⁶ The California Legislature’s failure to act for the 80 years leading up to Texaco and the 35 years since Texaco has hindered California—and its antitrust enforcers—in its mission to protect California from "threats to competition in their incipiency-much like section 7 of the Clayton Act."¹⁷

Though this is not without trying. I n reaction to Texaco, the Legislature attempted to course correct with Assembly Bill No. 671. AB 671 was introduced in February 1989 and outlawed monopolization and provided authority to review mergers. The bill ultimately failed, more than likely due to the skepticism in state merger authority reflected in Texaco. But while the bill was working through the California Legislature, in July of 1989, the FTC wrote to the California Senate and stated that "[s]tate law enforcement can play a valuable role in restraining anticompetitive conduct, particularly when competitive effects are limited to markets in the state."¹⁸ The letter, while criticizing some individual parts of AB 671, supported the idea that state law enforcement was valuable in protecting competition.

Some may argue that California does not need a state-specific merger law because the California Attorney General, or its citizens, can use section 7 of the Clayton Act as the predicate act for a Business and Professions Code section 17200 claim.¹⁹ But, in practice, parties are constrained in being able to effectively challenge mergers under section 17200 given Proposition 64’s amendments to section 17204.²⁰ While Section 17200—also known as the Unfair Competition Law—is powerful, it is ineffective in preventing mergers and is ineffective in preventing "conduct that threatens an incipient violation of an antitrust law."²¹

One consistent theme emerging from a review of the scant California-specific merger caselaw is the focus on protecting competition. As early as 1985, the California Supreme Court recognized that California’s antitrust laws reached beyond "clear-cut menaces to competition" in order to deal with merely "ephemeral possibilities" and "threats to competition in their incipiency."²² This is further reinforced by recent California Supreme Court language stating that effectively paying to avoid competition is a

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violation of the Cartwright Act.²³ And there is a reason for this: California is a hot bed for innovation and for competitors that represent a threat to a dominant, incumbent company.

II. CALIFORNIA FOSTERS INNOVATION AND NASCENT COMPETITORS

California is home to many of the largest companies in the United States and is one of the top five largest economies in the world.²⁴ It is home to three "Big Tech" companies: Google, Apple, and Facebook.²⁵California attracts top tech skilled laborers and employees due to the plethora of Fortune 100 companies headquartered in California. Additionally, California does not enforce noncompete clauses in employment contracts, thereby fostering a culture of innovation, which drives California’s start-up culture.²⁶ In 2022, San Francisco ranked number one in the United States for incubating startups, with 14,000 of them calling San Francisco home.²⁷Los Angeles was close behind, coming in at number three in the United States, with about 6,000 startups calling Los Angeles home.²⁸ Many of these companies are started with private investment funds or venture capitalist funds with aims to become acquired—turning equity into cash.²⁹

"Who buys startups? The answer, increasingly, is dominant incumbent players."³⁰ In California, Big Tech companies are the dominant incumbent players. They have significant market power, whether it be in defined product markets or more generally given their market cap and size.³¹Recent reports have shown that Big Tech acquires companies at an astonishing pace, acquiring over 70 companies in 2019 and 2020.³² Only a fraction of the acquisitions are reportable to the Antitrust Agencies under the HSR Act because many do not meet the reporting thresholds and requirements.³³ That means that the vast majority of the recent Big Tech transactions face limited antitrust scrutiny, at best, since they are nonreportable transactions.³⁴

Why should we care about nonreported transactions? Well, some of these acquisitions that fly under the radar are potentially transactions between a large, entrenched player and a nascent or potential competitor. These types of competitors have a variety of definitions but a seemingly applicable one in this situation is "a firm whose prospective innovation represents a serious threat to an incumbent."³⁵

Scholars point to a few classic examples of nascent competitor acquisition.³⁶ Facebook’s acquisitions of Instagram and WhatsApp usually appear as examples of an incumbent buying a nascent competitor. Ultimately, the acquisitions helped entrench what is now known as Meta as a dominant market player. Explicit evidence uncovered during post-merger investigations revealed the true intent behind the deals. Meta’s CEO stated that while Instagram had "a small team (10-25 employees) and no revenue," "the brand[] [is] already meaningful and if they grow to a large scale they could be very disruptive to us."³⁷ When asked by then Facebook’s CFO about the reason for potential acquisition of Instagram, and others, Mr. Zuckerberg responded stating that "what we’re really buying is time. Even if some new competitors spring up, . . . [the acquisitions] will give us a year or more to integrate their dynamics before anyone can get close to their scale again."³⁸ Mr. Zuckerberg went so far as to literally label Instagram’s business as "nascent."³⁹

Another example is Google’s acquisition of Waze in 2013. Google acquired Waze for $1.1 billion and while it did get a quick look by some of the world’s antitrust enforcers, none of them at the time pursued any further investigation. At least one of the antitrust enforcers stated that they believed Waze to be relatively small scale, which rendered the merger benign.⁴⁰ As the Antitrust Agencies, under new leadership, begin to focus on nascent competition and its importance,⁴¹ the Google-Waze deal may come back under scrutiny as Google and Waze remain two of the dominant players in the market.⁴²

Both Instagram and Waze were nascent competitors at their time of acquisition.⁴³ The two companies may have not been in what would typically be the defined market of the incumbents, but they were

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competitors that innovated, becoming potential threats to the incumbents. Instagram changed how social media pages were consumed and Waze, by crowd sourcing real-time traffic conditions, was able to change how traffic data flowed. While Instagram and Waze had promising innovation and posed serious threats to the incumbents in their respective markets, the key to why their ultimate acquisition was harmful to competition was the fact that the potential innovation had not fully come to fruition at the time of acquisition. In short, what could have been was never allowed to come to fruition.

California is full of potential and nascent competitors, like Instagram and Waze, given the state’s background in supporting innovation and startups. While the Instagram and Waze mergers were reviewed to a limited extent by the Antitrust Agencies, California is ready to have its own framework that specifically focuses on these types of acquisitions.

III. CALIFORNIA DESERVES TO HAVE ITS OWN MERGER LAW THAT FOCUSES ON REVIEWING POTENTIAL AND NASCENT COMPETITOR ACQUISITIONS

Under the current framework, which only involves federal law, some acquisitions of potential or nascent competitors may be reviewed by the Antitrust Agencies due to market outcry. The Antitrust Agencies may also review mergers after the close of the transaction in cases where post-merger actions raise significant competitive issues.⁴⁴ But, as every antitrust practitioner has heard, it is very hard to unscramble the eggs once the transaction has been consummated.⁴⁵ The current situation in the United States has two agencies reviewing, primarily, HSR-reportable transactions. But, as referenced above, many nonreportable transactions, likely filled with potential and nascent competitors, are being consummated daily. These acquisitions need to be reviewed at some level, even just to understand whether these acquisitions are ultimately harming consumers. California needs to provide tools to the California Attorney General, and its citizens, in order to challenge these oft non-reviewed acquisition.

California has state-specific issues it faces that strongly encourage its own state-specific merger law. California’s unique view on the purpose behind its antitrust laws—protecting competition itself—not only strongly supports that the Legislature establish a California state-specific merger law based on protecting the competitive process but requires it. Couple that with the Antitrust Agencies’ lack of resources, California’s commitment to its workers and employees through its prohibition on noncompetes, its unique start-up culture, and its unique position in the economy, California not only deserves to have its own merger law. It needs one.

First, California’s antitrust laws target incipient violations of law and protect the competitive process.⁴⁶ This is the strongest point in favor of having the California Legislature seriously consider writing and approving a state-specific merger law. A litany of California Supreme Court cases support the idea that California protects competition at its incipiency, and given that the United States is at its highest concentration in various markets in decades, it is clear that the Antitrust Agencies could use help in reviewing all sorts of mergers, including potential and nascent competitors.

Additionally, since at least the late 1980’s, the Antitrust Agencies have at least supported the idea that California should have its own merger review law.⁴⁷ This is logical given the fact that the Antitrust Agencies constantly grind to review the most pressing HSR-reportable cases and have recently been on record stating that they are resource constrained.⁴⁸ At least one other state has attempted to create its own, and first of its kind, state-specific merger review law and has been moving through the process.⁴⁹ California should do the same.

Finally, California’s prohibition on noncompete clauses and its start-up focused culture require that California should have a specific merger law that addresses the unique challenges facing California businesses, competitors, and workers. The unique

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ban on noncompete clauses through Business & Professions Code Section 16600 encourages businesses in California to compete in the labor market thus fostering innovation. California should implement laws to ensure that said innovation is not cut at its knees due to an incumbent offering an over-the-top buyout whereby preventing competition from even occurring. Some have suggested that the way venture-backed startups are structured, from incipiency, partly fuels the problem of incumbents buying potential or nascent competitors.⁵⁰ Dominant incumbent players may buy startups in order to "eliminate a potential competitor or adjacent challenger who might leapfrog them."⁵¹ Because of this view and fear of competition, "even if others are interested in buying the [start-up], the incumbent monopolist may value that company more than anyone else does."⁵² Both the embedded structure of start-up culture and the prohibition on noncompete clauses drives a further need for a California-specific merger law.

IV. WHAT WOULD A POTENTIAL CALIFORNIA MERGER LAW LOOK LIKE?

It seems obvious that an economy like California’s should have its own merger review law.⁵³ California caselaw supports adopting a California-specific merger law. California’s culture against noncompete clauses and culture supporting innovation drive the need for one. But then the inevitable question becomes what does a California-specific merger law look like?

Luckily, the world is filled with multiple antitrust bills that provide valuable starting points for discussion. New York’s Senate Bill 933, which has gone through various iterations, may be a helpful starting point that is more closely aligned with California’s position. In the original version of the bill, New York would change its antitrust laws to provide a first-in-kind state premerger notification program specifically aimed at merging entities in New York.⁵⁴Additionally, the bill had other unique provisions that significantly deviated from federal antitrust laws and the HSR Act: (1) the filing threshold would be lower than the HSR threshold;⁵⁵ (2) the reporting nexus was tied to the value of the assets or companies’ sales in New York;⁵⁶ (3) the notice period for closing was 60 days rather than the 30-days for the HSR period;⁵⁷ (4) $10,000 per day penalty for noncompliance;⁵⁸ (5) procompetitive effects are not a defense;⁵⁹ and (6) importantly, New York would change the standard to evaluate mergers to an abuse of dominance position.⁶⁰

While N.Y. SB 933 still has to work through various committees and legislative bodies, it posits interesting ideas that the California Legislature could reference in creating its own merger review law and premerger notification program.⁶¹ Of particular note is the abuse of dominance standard articulated in the bill. The "abuse of dominance" standard is a European Union standard that seems to have emerged from Article 102 of the Treaty on the Functioning of the European Union.⁶² In the United States, a relatively new movement, called the neo-Brandeis movement,⁶³ argues that this abuse of dominance standard was the original intent of the US antitrust laws.⁶⁴ Though we have moved far afield from said original intent, caselaw provides support for this position. In Otter Tail Power Co. v. United States, the Court held that "[u]se of monopoly power ‘to destroy threatened competition’ is a violation" of the Sherman Act.⁶⁵ In Philadelphia National Bank, the Court found that a merger between two banks that would control at least 30% of the commercial banking was problematic, stating that "the dominant theme pervading congressional consideration of the 1950 amendments [to section 7] was a fear of what was considered to be a rising tide of economic concentration in the American economy."⁶⁶California’s enforcement of its antitrust laws has not lost sight of this original intent; competition deserves to be protected and dominant firms should not abuse their power.

Just as Congress, through section 7 of the Clayton Act, "sought to assure the Federal Trade Commission and the courts the power to brake this force [the process of concentration in American business] at its outset before its gathered momentum,"⁶⁷ the California Legislature should enforce the words of the California Supreme Court in Cianci and Cel-

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Tech. It should provide power to the California consumer and California State Attorney General to reach incipient and problematic mergers. The United States, along with California, is already facing historic levels of concentration, an indication that previous antitrust regimes, while attempting to enforce the antitrust laws, simply could not hold the door in order to ensure the competitive process, and competition itself, was protected.

California, as a bastion of innovation and as part of its commitment to protecting its citizens, needs to draft and implement its own state-specific merger law aimed at fostering the competitive process and protecting competition itself. The lack of a state-law equivalent to the HSR Act or section 7 of the Clayton Act hinders California’s ability to promote innovation while protecting its citizens from abuses of market power and higher prices. Since California’s economy is prevalent with potential and nascent competitors, it requires a unique merger law that would allow the California Attorney General the ability to review and challenge mergers under California’s more expansive antitrust laws, while also providing private parties the ability to challenge mergers as well. By doing so, California would cement its place at the forefront of antitrust enforcement and double down on its commitment to protect competition.

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Notes:

^1. Abiel Garcia is a Partner at Kesselman Brantly Stockinger LLP. He began his legal career as an Honors Attorney for the California Department of Justice, then as a Deputy Attorney General for the California Department of Justice, working in the Antitrust Section across his tenure. Thereafter, he joined Gibson Dunn and Crutcher, working in the Antitrust and White Collar practice groups. He received his J.D. in 2012 from Columbia Law School, where he was a Harlan Fiske Stone Scholar.

^2. See, e.g., Dario Focarelli and Fabio Panetta, Are Mergers Beneficial to Consumers? Evidence from the Market for Bank Deposits, 93(4) AM ECON. REV (2003).

^3. M&A Activity by Year: Collected Reports, Boston Consulting Group, available at .

^4. Congress enacted the Hart-Scott-Rodino Antitrust Improvement Act in 1976 (15 U.S.C. § 18a) to establish a premerger notification process that parties to certain large mergers and acquisitions must follow. It is the only federal premerger notification process that applies to all mergers and acquisitions that meet the Act’s requirements. The purpose of the Act, as set forth in the statutory scheme, and attendant regulations, is to provide the federal antitrust agencies (DOJ and FTC) with an opportunity to review prior to closing and seek to enjoin mergers or combinations that threaten to substantially reduce competition or tend to create a monopoly in violation of Section 7 of the Clayton Act. See FED. TRADE COMM’N, What is the Premerger Notification Program? An Overview (March 2009), https://www.ftc.gov/sites/default/files/attachments/premerger-introductory-guides/guide1.pdf.

^5. FED. TRADE COMM’N, FTC and DOJ’s Hart-Scott-Rodino Annual Report for Fiscal Year 2021 (2023), https://www.ftc.gov/system/files/ftc_gov/pdf/p110014fy2021hsrannualreport.pdf.

^6. According to the Institute for Mergers, Acquisitions and Alliances, the number of mergers and acquisition deals in North America in 2021 was 29,642. Available at< https://imaa-institute.org/mergers-and-acquisitions-statistics/>.

^7. Two banking statutes create alternative review procedures for proposed mergers between banks. The Bank Merger Act, 12 U.S.C. § 1828(c), grants merger review authority over banks to the Comptroller of Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Office of Thrift Supervision, of which enforcement and review is executed via the DOJ.

^8. Khushita Vasant, Kanter says US DOJ’s antitrust division being understaffed is source of ‘common’, ‘constant concern’, LexisNexis (May 4, 2023), https://mlexmarketinsight.com/news/insight/kanter-says-us-doj-s-antitrust-division-being-understaffed-is-source-of-common-constant-concern.

^9. FED. TRADE COMM’N, supra note 5, at app. A, available at .

^10. In practice, bringing merger challenges under federal law as a private actor or a state agency can be especially difficult as parties to the merger will take the position that since the Antitrust Agencies have not acted against the transaction, such inaction can be interpreted as "blessing the transaction." See Brief of the United States of America as Amicus Curiae in support of Appellee Steves and Sons, Inc., Steves and Sons, Inc. v. JELD-WEN Inc., Case No. 19-cv-1397 (4th Cir. Aug. 23, 2019), https://www.justice.gov/atr/case-document/file/1197696/download ("Contrary to JELD-WEN’s suggestion, no inference should be drawn from the Division’s closure of its investigations into JELDWEN’s proposed and consummated acquisition of CMI. As the United States has stated twice previously in this case in response to JELD-WEN’s assertions, there are many reasons why the Antitrust Division might close an investigation or choose not to take an enforcement action. The Division’s decision not to challenge a particular transaction is not confirmation that the transaction is competitively neutral or procompetitive." (citations omitted)). Additionally, how to assess mergers involving potential or nascent competitors is the subject of much debate under federal law and a new state law crafted by the California Legislature could provide much needed clarity.

^11. Cianci v. Superior Court, 40 Cal. 3d 903, 920 (1985).

^12. In re Cipro Cases I & II, 61 Cal. 4th 116, 160-61 (2015).

^13. Aryeh v. Canon Business Solutions, Inc. 55 Cal.4th 1185, 1195 (2013).

^14. State of California ex rel. Van de Kamp v. Texaco, Inc., 46 Cal.3d 1147 (1988).

^15. Id. at 1162-63.

^16. Id.

^17. Cianci, 40 Cal.3d at 918.

^18. Letter from Chairman Daniel Oliver Chairman, FTC, to Hon. John T. Doolittle, California State Senate, Sen. (July 7, 1989), https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-hon.john-t.doolittle-concerning-california.b.671-require-certain-persons-who-file-hart-scott-rodino-premerger-notification-also-file-reports/v890079.pdf.

^19. Section 17200 of the California Business & Professions Code states, "[U]nfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code."

^20. Proposition 64 curtails private actions under the Unfair Competition Laws by amending the statute to confer standing only on "any person who has suffered injury in fact and has lost money or property as a result of such unfair competition." See Cal. Bus. & Prof. Code § 17204. The heightened requirements make it more difficult for a plaintiff to bring a section 17200 claim challenging a merger that involves a potential or nascent competitor since a plaintiff may not have standing under the amended standing requirement.

^21. Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 187 (1999).

^22. Cianci, 40 Cal.3d at 918 (citing to Brown Shoe Co. v. United States, 370 U.S. 294, 323 (1962)).

^23. In re Cipro Cases I and II, 61 Cal.4th 116, 150 (2015).

^24. Matthew A. Winkler, California Poised to Overtake Germany as World’s No. 4 Economy, Bloomberg (Oct. 24, 2022 5:22 AM), https://www.bloomberg.com/opinion/articles/2022-10-24/california-poised-to-overtake-germany-as-world-s-no-4-economy.

^25. Big Tech generally refers to Google, Amazon, Facebook, Amazon, and to an extent, Microsoft.

^26. Chris DeVore, "Silicon Valley Keeps Winning Because Non-Competes Limit Innovation, TECHCRUNCH (Feb. 18, 2016 12:00PM), https://techcrunch.com/2016/02/18/silicon-valley-keeps-winning-because-non-competes-limit-innovation.

^27. Telstra Ventures, "Year 3: Insights to America’s Emerging Tech Hubs (Mar. 2, 2023), https://telstraventures.com/wp-content/uploads/2023/03/Emerging-TechHub-Report-2022.pdf.

^28. Id.

^29. See Mark Lemley & Andrew McCreary, Exit Strategy, 101 B.U. L. Rev. 1 (Jan. 2021).

^30. Id. at 8.

^31. Forbes list of Fortune 500 companies, by annual revenue, for the year 2022 names Amazon as the second largest company in the United States, followed by Apple at number 3, Google (Alphabet) at number 8, Microsoft at number 14, and Facebook (Meta) at number 27.

^32. Diana L. Moss, AM. ANTITRUST INST., Update on Digital Technology: The Failure of Merger Enforcement and Need for Reform (Mar. 3, 2021), https://www.antitrustinstitute.org/wp-content/uploads/2021/03/Merger-Enforcement_Big-Tech_3.3.21_F.pdf.

^33. Id.

^34. "[S]crutiny is absent in nonreportable deals, leaving the buyer in position to assume significant future antitrust risk if the seller has run afoul of antitrust laws." Jennifer Oliver, "Practical Guidance: M&A, Professional Perspective – Antitrust Issues in Nonreportable M&A Deals", Bloomberg Law (Dec. 2019), https://www.bloomberglaw.com/external/document/XAAV6U0C000000/m-a-professional-perspective-antitrust-issues-in-nonreportable-m.

^35. C. Scott Hemphill & Tim Wu, Nascent Competitors, 168 U. Pa. L. Rev. 1879 (2020) https://scholarship.law.columbia.edu/faculty_scholarship/2661.

^36. Id.

^37. Email from Mark Zuckerberg, Chairman and CEO, Facebook, Inc., to David Ebersman, CFO, Facebook, Inc. (Feb. 27, 2012 11:41 PST), https://judiciary.house.gov/uploadedfiles/ 0006322000063223.pdf [https://perma.cc/4B6V-S42E].

^38. Email from Mark Zuckerberg, Chairman and CEO, Facebook Inc., to David Ebersman, CFO, Facebook, Inc. (Feb. 28, 2012 9:55 AM), https://judiciary.house.gov/uploadedfiles/ 0006322000063223.pdf [https://perma.cc/4B6V-S42E].

^39. Email from Mark Zuckerberg, Chairman and CEO, Facebook, Inc., to David Ebersman, CFO, Facebook, Inc. (Feb. 27, 2012 11:41 PST), https://judiciary.house.gov/uploadedfiles/ 0006322000063223.pdf [https://perma.cc/4B6V-S42E].

^40. UNITED KINGDOM Office of Fair Trading, Completed acquisition by Motorola Mobility Holding (Google, Inc.) of Waze Mobile Limited, CASE NO. ME/6167/13 (December 17, 2013), https://assets.publishing.service.gov.uk/media/555de2cfed915d7ae2000027/motorola.pdf.

^41. Press Release, Fed. Trade Comm’n, Federal Trade Commission and Justice Department Seek to Strengthen Enforcement Against Illegal Mergers: Agencies Launch Joint Public Inquiry Aimed at Modernizing Merger Guidelines to Better Dectect and Prevent Anticompetitive Deals (Jan. 18, 2022) https://www.ftc.gov/news-events/news/press-releases/2022/01/federal-trade-commission-justice-department-seek-strengthen-enforcement-against-illegal-mergers (stating that the FTC and DOJ were launching a joint public inquiry aimed at strengthening enforcement against illegal mergers, including threats to potential and nascent competition).

^42. Mark Bergen & Ben Brody, Google’s Waze Deal Is a Likely Target in FTC Antitrust Sweep, Bloomberg (Feb. 14, 2020), https://www.bloomberg.com/news/articles/2020-02-14/google-s-waze-deal-is-a-likely-target-in-new-ftc-antitrust-sweep#xj4y7vzkg.

^43. While the two transactions are exemplars of nascent competitors, some may point out that these deals were at least reviewed by competition agencies and were reported pursuant to HSR guidelines. While that is true, the fact that the deals were ultimately not challenged further reinforced the need for California’s own merger law that focuses on reviewing potential and nascent competitor acquisitions. See infra Section III.

^44. See Third Amended Final Judgment, U.S. v. Bazaarvoice, Inc., No. 13-cv-00133 WHO (N.D. Cal. Dec. 2, 2014) https://www.justice.gov/atr/case-document/file/488816/download (ordering the divesture of assets based on a DOJ complaint-stating that a consummated merger resulted in a substantial lessening of competition-that was subsequently filed after the close of a transaction).

^45. DOJ’s Antitrust Assistant Attorney General called the remedy of divesture difficult to do when competition and the market are "dynamic, complex and often multidimensional." Jonathan Kanter, Assistant Attorney Gen., Dep’t of Justice, Antitrust Div., Remarks to the New York State Bar Association Antitrust Section (Jan. 24, 2022), https://www.justice.gove/opa/speech/assistant-attorney-general-jonathon-kanter-antitrust-division-delivers-remarks-new-york.

^46. See supra Section I.

^47. See supra note 12.

^48. See, e.g., FED. TRADE COMM’N, Budget Justification for the Federal Trade Commission’s 2024 Budget Request 11 (March 11, 2023), https://www.ftc.gov/system/files/ftc gov/pdf/p859900fy24cbj.pdf (stating that increased "pressure on staffing resources in recent years" justified the request for over 300 additional employees).

^49. Assem. A812, 2021-2022 Leg. Sess. (N.Y. 2021); S. S933C, 2021 -2022 Leg. Sess. (N.Y. 2021); see N.Y. CITY BAR, Report on Legislation by the Antitrust and Trade Regulation Committee (June 2022), https://s3.amazonaws.com/documents.nycbar.org/files/20221055-21cAntitrustAct.pdf>. The proposed Senate Bill (S933) also added provisions covering monopolization and attempted monopolization under New York state law. See S. 933A, 2021-2022 Leg. Sess. (N.Y. 2021).

^50. "Incumbent acquirers may (or may not) want the technology in good faith to add to their products, even if it does not work out in the end. They’d certainly rather have it themselves than let a competitor have it. And they have money to burn. But one party is left out of this equation: the consumer. Incumbents pay—can afford to pay—even for technologies they don’t use because eliminating potential challengers keeps their profits high." Mark Lemley & Andrew McCreary, supra note 30, at 10.

^51. Id. at 8.

^52. Id.

^53. For those wondering about federal preemption and whether it is proper for state agencies to review mergers, this question was settled in California v. American Stores Co., 495 U.S. 271 (1990), in which California was able to bring a claim against two merging supermarkets stating that the merger "constituted an anticompetitive acquisition violative of section 7 of the Clayton Act and would harm consumers throughout the state." Id. Not only is the law well settled at this point, but interestingly enough, now at least one state has taken the position that its review and blessing of a merger (under its Certificate of Public Advantage for hospitals) shields the hospital merger from federal HSR reporting guidelines. See The State of Louisiana’s Motion to Intervene, Louisiana Children’s Medical Center v. Garland, No. 223-CV-01305 (E.D. L.a. Apr. 23, 2023), https://litigationtracker.law.georgetown.edu/wp-content/uploads/2023/05/LCMC_20230423_State-of-Louisiana-Motion-to-Intervene.pdf..

^54. S. S933A, 2021-2022 Leg. Sess. § 340(10) (N.Y. 2021); see Overview of Senate Bill S933C, https://www. nysenate.gov/legislation/bills/2021/s933/amendment/a.

^55. S. S933A, 2021-2022 Leg. Sess. § 340(10)(A)(III) (N.Y. 2021).

^56. Id.

^57. Id. § 340(10)(B).

^58. Id. § 340(10)(F).

^59. Id. § 340(2(B)(III).

^60. Id. § 340(2)(B)

^61. There have been multiple federal bills that have attempted to rewrite the antitrust laws, though not all of them are merger specific. To name a few: the Competition and Antitrust Law Enforcement Reform Act from Sen. Amy Klobuchar; the Tougher Enforcement Against Monopolies Act from Sen. Mike Lee; the American Innovation and Choice Online Act; and the Prohibiting Anticompetitive Mergers Act from Sen. Warren, among others.

^62. While Article 102 does not specifically use the language, it provides categories of behavior that it finds abusive such as limiting production to the prejudice of consumers or discrimination among similar transactions. See Consolidated Version of the Treaty on the Functioning of the European Union-Part Three: Union Policies and Internal Actions-Title VII: Common Rules on Competition, Taxation And Approximation of Laws-Chapter 1: Rules on Competition-Section 1: Rules Applying to Undertakings-Article 102, 2008 O.J. (C 115/1) 89, https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX%3A12008E102.

^63. The New Brandeis movement is an academic and political antitrust movement that suggests excessive centralized private power is dangerous for a variety of reasons including economic, political and social reasons. See Timothy Wu, The Curse of Bigness: Antitrust in the New Gilded Age (2018).

^64. Lina Kahn, Amazon’s Antitrust Paradox, 126 Yale L.J. 710, 743 (2017).

^65. 410 U.S. 366, 377 (1973).

^66. United States v. Phila. Nat’l Bank, 374 U.S. 321, 363–64 (1963) (citing Brown Shoe Co. v. United States, 370 U.S. 294, 317 (1962)).

^67. Brown Shoe Co., 370 U.S. at 317-18.

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