Digital Competition Act of 2018

[Baudin]

Senator Baudin of North Carolina, on behalf of herself, and with Senator Rollins of Nebraska, introduces,

 

A Bill

 

To update Antitrust legislation and foster competitive practices in the digital market.

 

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled.

Section 1: Short Title

This Act may be cited as the "Digital Competition Act of 2018".

Section 2: Findings and Purpose

(a) Congress finds that

(a1) The digital economy has grown rapidly, resulting in significant market power for a few large technology companies.

(a2) Current antitrust laws are not fully equipped to address the complexities and unique characteristics of digital markets.

(a3) Encouraging competition and innovation in digital markets is crucial for consumer choice and economic growth.

(a4) The concentration of market power in the hands of a few companies raises concerns about competition, innovation, data privacy, and consumer choice.

(a5) Excessive government intervention can stifle innovation and economic freedom and so any update to anti-trust policies must remain balanced. 

(b) Purpose: The purpose of this Act is to modernize antitrust laws to address the challenges posed by digital markets, promote fair competition, protect consumer interests, and foster innovation and a free market environment through targeted measures.

Section 3: Definitions

(a) Digital Platform: Any online service, application, or site that facilitates the interaction between users and content, services, or goods.

(b) Dominant Platform: A digital platform with substantial market power, characterized by control over a significant share of market activity, user engagement, or data.

(c) Market Power: The ability of a firm to control prices, exclude competitors, or dictate terms within a relevant market, considering factors such as user data control, network effects, and platform ecosystems.

Section 4: Merger and Acquisition Review

(a) Pre-Merger Notification:

(a1) Any proposed merger or acquisition involving a digital platform with annual revenues exceeding $500 million must be notified to the Federal Trade Commission (FTC) and the Department of Justice (DOJ) at least 60 days before completion.

(a2) The notification must include detailed information on the companies involved, the market impact, and potential competitive effects.

(b) Review Criteria:

(b1) The FTC and DOJ will evaluate proposed mergers and acquisitions based on their impact on competition, innovation, and consumer choice. Factors include potential reduction of market competition, impact on data privacy, and likelihood of consumer harm.

(b1.1)The focus of the FTC and DOJ should ultimately be on preventing monopolistic practices. 

(b2) Special attention will be given to mergers that could lead to the elimination of potential competitors or create barriers to entry for new firms.

(b3) Mergers that enhance efficiency and consumer welfare without significantly reducing competition will be encouraged by the FTC and DOJ. 

(c) Prohibited Mergers:

(c1) Mergers and acquisitions that significantly reduce competition or create a monopoly within a relevant market are prohibited.

(c2) Acquisitions aimed at eliminating potential competitors, known as "killer acquisitions," are prohibited.

Section 5: Anti-Competitive Practices

(a) Prohibited Practices:

(a1) Predatory Pricing: It is unlawful for dominant platforms to sell products or services below cost with the intent to eliminate competitors.

(a2) Tying and Bundling: It is unlawful for dominant platforms to require customers to purchase additional products or services as a condition for accessing a desired product or service.

(a3) Exclusive Contracts: It is unlawful for dominant platforms to enter into agreements that prevent competitors from accessing key markets or resources.

(b) Penalties for Violations:

(b1) Fines up to 10% of the company’s annual global revenue.

(b2) The FTC may recommend structural remedies, including divestitures or changes to business practices, which organization's must apply within 360 days of recommendation, or appeal to FTC. 

Section 6: Transparency and Accountability

(a) Mandatory Reporting:

(a1) Companies must submit annual reports to the FTC detailing compliance with antitrust regulations, including data usage, algorithm design, and competitive practices.

(a2) Companies must disclose the criteria and methodologies used in their algorithms that affect consumer choice and market competition.

(b) Independent Audits:

(b1) Companies must undergo annual audits by independent third parties to assess compliance with antitrust regulations.

(b2) Results of these audits must be made publicly available, unless the FTC has been given reason otherwise. 

Section 7: Strengthening Regulatory Bodies

(a) Increased Funding: Allocate an additional $350 million annually to the FTC and DOJ for enhanced enforcement capabilities, including hiring additional staff with expertise in digital markets.

(b) Specialized Units:

(b1) Establish specialized units within the FTC and DOJ focused on digital markets and technology companies.

(b2) These units will be responsible for monitoring market activities, conducting investigations, and enforcing regulations specific to the digital economy.

Section 8: Encouraging Innovation and Competition

(a) Innovation Grants:

(a1) Provide $500 million annually in grants for startups and small businesses in the tech sector to support research, development, and market entry.

(a2) Encourage public-private partnerships to drive innovation.

(b) Reducing Barriers to Entry:

(b1) Simplify regulatory requirements for new entrants in the digital market.

(b2) Promote open standards and interoperability through industry collaboration.

Section 9: Effective Date

This Act shall take effect 180 days after the date of enactment