MESSAGE FROM THE ADVISORS

By Cheryl Lee Johnson and Geoffrey T. Holtz¹

This Spring 2023 issue of the Antitrust and UCL Section’s Competition Journal is inspired by and dedicated to the study of potential antitrust reforms directed by the California Legislature’s Assembly Concurrent Resolution (ACR) No. 95.² ACR 95 draws on a body of studies and growing concerns about increasing market power concentration and the need for legislative action and reform. One of the sponsors of the bill, Assembly member Wick remarked that:

"the accumulation of power among California’s tech giants is snowballing, and 20^th Century antitrust laws are ill equipped to take on these monopolies. As we emerge from the pandemic, we need to do all we can do to allow small businesses to compete, and make sure that such a great deal of power doesn’t fall into so few hands. As our country’s largest economy and hub of innovation, it’s critical that California join Congress and other state governments in their efforts to revamp antitrust laws."

The California Law Revision Commission, created in 1953, is tasked with the continuing substantive review of California statutory and decisional law to make recommendations to the Legislature for needed reforms. Under ACR 95, the Legislature directed the California Law Revision Commission to study and report back on three antitrust topics:

1. Whether the law should be revised to outlaw monopolies by single companies as outlawed by Section 2 of the Sherman Act
2. Whether the law should be revised in the context of technology companies so that analysis of antitrust injury in that setting reflects competitive benefits such as innovation and permitting the personal freedom of individuals to start their own businesses and not solely whether such monopolies act to raise prices;

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3. Whether the law should be revised in any other fashion such as approvals for mergers and acquisitions and any limitation of existing statutory exemptions to the state’s antitrust laws.

To assist in the performance of the ACR 95 task, the Commission assembled seven working groups with some of the leading academics and experts on antitrust issues and some of the states leading antitrust practitioners to study the topics.

In this issue of Competition, our contributors discuss some of the key considerations the Commission should address when assessing the topics assigned by the legislature. California is uniquely situated among the states to explore these issues. California’s $3.6 trillion economy would be the fifth largest in the world if it were a separate country. It is the incubator and home to a significant number of the world’s largest and most innovative technology companies, and its technology industry is an enormous contributor to the state’s economic growth and success. California is thus well-positioned to take a leading role in addressing anti-competitive conduct. But one of the reasons our state has attracted technology visionaries for decades is that it has attractive policies, such as the freedom for employees to move to or start competing ventures, that have allowed companies to innovate and thrive here. Legislative proposals need to be carefully scrutinized to assess whether they will further competition and innovation or stifle it. And, of course, there already exists a body of federal antitrust law that is available as a tool for state regulators to target anti-competitive conduct, so attention should be paid to whether new legislation will fill critical regulatory gaps in existing state or federal law or simply add a duplicative layer of red tape and increased costs that will drive businesses to other states.

This issue of Competition addresses some of the broad issues under consideration by the Commission and the balancing of these competing interests, including:

• Is new legislation needed to broaden oversight over single-firm monopolization conduct under state law beyond that available under the current Cartwright Act and Unfair Competition Law? Section 2 of the Sherman Act is available to address such conduct, but are there critical deficiencies in that legal regime that state law should fill?
• Should California adopt a merger review regime with its own HSR-style filing and approval processes? What standards should apply that would be different from, and preferable to, the existing federal laws governing mergers that would justify the added costs and burdens to both businesses and state regulators?
• Are there victims of anti-competitive conduct that are denied remedies under current California and federal competition laws whose identities and injuries could be readily determined, warranting an expansion of the antitrust standing requirements? If so, does the answer lie in revisions to the substantive law or procedural rules, and how should state law be expanded to allow for appropriate remedies without unduly burdening

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businesses with excessive litigation over conduct that is not, in fact, anti-competitive or with duplicative judgments?

The Commission’s work is in its early stages, and we welcome and urge members of the California antitrust bar to stay apprised of its efforts and to participate in its processes to ensure that California’s antitrust laws address the needs of our modern technological world and strike the proper balance to further healthy competition while keeping anti-competitive conduct in check.

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Notes:

^1. Cheryl Johnson, formerly with the office of the California Attorney General, and Geoffrey Holtz, a partner with Morgan Lewis & Bockius LLP, are advisors to the Executive Committee of the Antitrust and Unfair Competition Law Section, and serve as the liaisons between the Committee and the California Law Revision Commission.

^2. Available at https://openstates.org/ca/bills/20212022/ACR95.

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