On June 7, 2021, the New York State Senate passed the 21st Century Antitrust Act. The bill has significant implications for companies doing business in New York State, regardless of their industry.1 Specifically it would 1) establish the first "abuse of dominance" offense in the United States, prohibiting firms with a "dominant position" from abusing that position through conduct such as tying or refusing to deal with a competitor and 2) require pre-merger notifications (similar to federal HSR filings) with the New York Attorney General for certain transactions.
New York's other legislative chamber, the State Assembly, adjourned on June 10 without voting on the bill, making its prospects for becoming law uncertain. New York has no more legislative days scheduled in 2021, though state leaders could add more. If the law does not pass the State Assembly this year, it would need to be reintroduced next year in both chambers.2 Regardless, the 21st Century Antitrust Act warrants attention because it would enact a more expansive "abuse of dominance" standard for unilateral conduct. The bill borrows and expands on the abuse of dominance offense from the European Union and other non-U.S. competition laws. If enacted, the bill would represent one of the most aggressive attempts to regulate single firm conduct in the world. Below, we summarize the provisions of the 21st Century Antitrust Act and its potential impact on businesses.
New York's Proposed Abuse of Dominance Standard
The 21st Century Antitrust Act would make it unlawful for any company with a "dominant position" to abuse that dominant position. The bill explicitly applies to both sellers and buyers and extends its coverage to labor markets. The bill provides some description of "dominant position" and "abuse of dominance," but delegates authority to the New York Attorney General to promulgate rules and regulations to effect the legislation. The key aspects of the abuse of dominance offense as laid out in the bill are as follows:
- "Dominant position." A plaintiff (either the New York attorney general or a private plaintiff) can establish dominance by showing the defendant has a market share of 40 percent or higher (if a seller) or 30 percent or higher (if a buyer). A plaintiff can also establish dominance by showing the company is not constrained by "meaningful competition" (for example, having the unilateral power to set prices or terms). The lower threshold for showing market power under the bill would therefore be expected to catch a wide range of firms than those that are subject to Section 2 today.
- "Abuse of dominance." The bill prohibits conduct that would "tend to foreclose or limit the ability or incentive of one or more actual or potential competitors to compete." Examples of such conduct include leveraging a dominant position in one market to limit competition in a separate market, or "unnecessarily" refusing to deal with a competitor. This standard would encompass a wide range of business conduct that has typically been permissible under existing state and federal antitrust law.
For labor markets, the bill provides that "abuse of dominance" would include imposing contractual terms that prohibit a person from engaging in a particular profession or business. This could have the effect of creating antitrust liability for companies who have previously entered into what are today considered reasonable, narrowly tailored non-compete agreements with employees. The bill would also forbid restrictions on the ability of workers or independent contractors to disclose wage and benefit information.
- No procompetitive justifications. The bill states that evidence of procompetitive effects "shall not be a defense to abuse of dominance and shall not offset or cure competitive harm." This is another significant departure from cases under Section 2 of the Sherman Act, in which the courts consider procompetitive justifications for a monopolist's conduct and, if such justification is established, weigh the anticompetitive harm from a practice against its procompetitive benefits. These provisions of the bill go beyond the approach of the European Commission, which considers efficiencies and benefits in determining whether unilateral conduct has objective justifications.
- Class actions allowed. Plaintiffs can bring class action claims to enforce the law's provisions. Because the law prohibits such a wide range of previously lawful conduct, companies doing business in New York will be exposed to significant antitrust liability.
New York's Proposed Pre-Merger Notification Regime
The bill would require pre-merger notification filings with the New York attorney general for transactions where 1) the buyer would acquire assets or voting securities greater than 10 percent of federal merger filing thresholds, and 2) the buyer or seller has sales or assets in New York greater than 2.5 percent of federal merger filing thresholds. Notably, merging parties must make the required filing at least 60 calendar days before closing the acquisition. For comparison, the federal antitrust agencies only require a 30-calendar day waiting period between making an HSR filing and closing the merger (unless the agencies opt to issue a Second Request).
Many of the details of the proposed pre-merger notification regime will need to be determined by the New York attorney general, who is empowered to create implementing rules and regulations. At a minimum, the bill will make closing transactions more costly and time consuming for many merging parties by extending the pre-merger waiting period in the United States by 30 days for those transactions that must also be notified in New York.
The prospects of passage for the 21st Century Antitrust Act are currently uncertain. If enacted in its current form, the bill would represent a dramatic departure from established antitrust norms in the United States. Companies that do business in New York State could face significant and uncertain antitrust liability for conduct that is permissible and even procompetitive under existing U.S. antitrust laws. We will provide further updates and analysis on this legislation as it continues to progress.
 S.933A, 2021 State S., 2021–2022 Leg. Sess. (N.Y. 2021).
 Ryan Tracy, New York Senate Passes Antitrust Bill Targeting Tech Giants, The Wall Street Journal, June 7, 2021, https://www.wsj.com/articles/new-york-senate-passes-antitrust-bill-targeting-tech-giants-11623098225.