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August,2020

The Pandemic Anti-Monopoly Act – Pros and Cons

The COVID 19 crisis has changed the way we live. With numerous countries being on lockdown and a lot of people dying each day, the economy has taken quite a hit. While we might be amid a global pandemic and a severe economic crisis – we’re not the only ones suffering.

A pandemic is a perfect time for more giant corporations to eat up their remaining small company competition. Small businesses are in shambles due to the lockdown and new regulations, since the money simply stopped flowing.

The problem got so serious that the government had to step in. The newly introduced Pandemic Anti-Monopoly act promises to keep the market as free, safe, and well as possible during the pandemic – but while beneficial, there are a couple of drawbacks to this act.

Below, we’ll be exploring the new act, what it imposes, and the benefits and drawbacks of such an act.

The Act Itself

The act starts with an acknowledgment that things are not going smoothly in the cooperative landscape due to the coronavirus pandemic. Many small businesses, start-ups, and entrepreneurs struggle as they can’t make money during the collapse.

The document further elaborates on the problem, noting that big technology and big pharmacy has made moves to secure smaller companies through risky mergers, thus exploiting the situation for profit.

Predatory merges are when larger companies merge with smaller companies to eliminate competition. While the global pandemic and ensuing economic crisis have hit larger corporations, they can survive the hit – smaller companies can’t.

Aside from the open markets, these predatory mergers hurt the economy further. While larger corporations have benefited disproportionately from relief programs, their predatory alliances hinder small company operations, which could be crucial to fighting the epidemic, especially in the private medical manufacturing sector.

Antitrust agencies such as the FTC (Federal Trade Commission) are tasked with keeping open markets safe and free by stopping such predatory mergers. Still, the recent pandemic has prohibited the federal government from acting in such ways to an extent.

With resources being far fewer and in between, drastic measures need to be taken to protect the market and smaller businesses. That is why Elizabeth Warren, a Democratic US senator, has introduced the Merger moratorium.

The Merger moratorium is the pandemic anti-monopoly act, and it promises to keep markets fair, safe, and as operational as possible. If you want to read the full version of this act, click here.

What Does It Mean?

In short, this means that smaller businesses are going to be protected amid this global pandemic. The economy might be struggling, but no company has taken a hit, such as small companies. It’s in the interest of the federal government and antitrust agencies to protect them as well as possible.

Pros and Cons

There are always two sides to one coin, and this act does have some fundamental drawbacks. Some professional antitrust officials feel that this act is misguided and protects the rights of companies rather than workers.

Below, we’re going to assess the benefits and drawbacks of this act.

Pros:

It Protects Small Companies

Small companies are the backbone of any economy, and in such turbulent times, it’s not a far-fetched idea that more than a couple of them are in financial peril. COVID 19 hasn’t only been tragic in terms of lives lost, as livelihoods also present a significant portion of the pandemic victims.

This act promises to keep mom-and-pop, small local businesses safe from predatory mergers, which are continually on the rise. Small companies are not the only ones in danger of predatory acquisition, as specific industries have taken a hit while others have flourished. That’s why we’re seeing Amazon’s interest in purchasing AMC, the USA’s biggest cinema theater chain.

It Keeps the Markets Open

Keeping the markets open is quintessential to keeping the markets safe, fair, and consumer friendly. A safe and open market guarantees healthy amounts of competition, promotes ideas and innovation and prevents monopoly. During this pandemic, keeping the market open and fair has only been burdened by predatory acquisitions.

This federal regulation plans to prohibit such predatory acquisitions, thus keeping the market open.

It Unburdens the Health System

The health system has been under a lot of pressure lately due to the global pandemic. Dealing with several patients, doing research, and working for the people is not easy, and predatory mergers could further burden this system.

Aside from unfair, any more significant consolidation of companies such as these occurring predatory mergers is a significant health risk that burdens the health system.

Cons:

It Might Not Protect Worker Rights

While predatory mergers hurt companies a lot, they hurt workers as well. In these turbulent times, when most businesses are not operating, preventing mergers could lead to a lot of people losing their jobs, which is a viable concern for most people working in the hospitality, entertainment, and transportation industry.

It Might Hinder Life-Saving Innovation

Two heads are always better than one. With larger mergers being strictly prohibited, as proposed by the pandemic anti-monopoly act, it could have a severe impact on vital, life-saving technology. With researchers losing their jobs left and right, a merger could supply employment and a steady innovation route.

Final Thoughts

While most American people (over 60%) are on board with a complete ban on predatory mergers that seem to exploit the pandemic for their gain, the drawbacks of such an act must be considered.

The act aims to protect small businesses, workers & consumers, and the health system – but its full implementation could hinder other essentials. Protecting the people and small companies is essential, and while this act promises to do so, it still has some viable critiques.

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