Rep. David Cicilline (D-RI), who chairs a House subcommittee on antitrust and competition, is proposing that the next coronavirus relief legislation include a moratorium on corporate mergers and acquisitions.
“As millions of businesses struggle to stay afloat, private equity firms and dominant corporations are positioned to swoop in for a buying spree,” he said in a virtual discussion on Thursday before the Open Markets Institute.
Transactions would still be allowed if a company is in bankruptcy or near insolvency.
Cicilline cited reports that private equity firms are “sitting on $2.5 trillion of investor cash,” and major technology companies have more than $570 billion, giving them to resources to make big plays for smaller firms. There has been speculation that media companies could be potential targets of tech giants.
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“Mega-mergers and corporate takeovers that were permitted during the last economic crisis led to the firing of millions of workers, the slowing of investment and innovation and huge increases in executive compensation,” Cicilline said. He warned of another period of “rampant and unhealthy consolidation.”
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Cicilline’s subcommittee already is conducting a review of competition in the tech industry.
He said, “Our country has already had a moratorium on union formation in the wake of this pandemic. It is unthinkable that we would allow mega-mergers and private-equity takeovers during this crisis.”
Negotiations over the next coronavirus relief legislation is likely to be more contentious, as Senate Republicans already have signaled concerns over spending.
Merger reviews have continued during the crisis.
In March, the Justice Department’s Antitrust Division announced that the coronavirus crisis could cause delays in merger reviews. The division said that transactions in their final stages of review may require an additional 30 days for review.
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