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A01812 Text:

                STATE OF NEW YORK
                               2021-2022 Regular Sessions
                   IN ASSEMBLY
                                    January 11, 2021
        Introduced  by  M.  of  A.  DINOWITZ,  GOTTFRIED, REYES -- read once and
          referred  to  the  Committee  on  Economic  Development  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
        AN  ACT  to  amend  the  general business law, in relation to actions or
          practices  that  establish  or  maintain  a  monopoly,  monopsony   or
          restraint  of  trade,  and  in  relation to authorizing a class action
          lawsuit in the state anti-trust law
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  This  act shall be known and may be cited as the "Twenty-
     2  First Century Anti-Trust Act".
     3    § 2. Legislative findings. The legislature hereby finds  and  declares
     4  that there is great concern for the growing accumulation of power in the
     5  hands  of large corporations. While technological advances have improved
     6  society, these companies possess great and  increasing  power  over  all
     7  aspects  of our lives. Over one hundred years ago, the state and federal
     8  governments identified these same problems as big  businesses  blossomed
     9  after  decades  of industrialization.   Seeing those problems, the state
    10  and federal governments enacted  transformative  legislation  to  combat
    11  cartels,  monopolies,  and other anti-competitive business practices. It
    12  is time to update, expand and clarify our  laws  to  ensure  that  these
    13  large  corporations  are  subject to strict and appropriate oversight by
    14  the state. The legislature further finds and  declares  that  unilateral
    15  actions  which  seek to create a monopoly or monopsony are as harmful as
    16  contracts or agreements of multiple parties to do the same and should be
    17  treated similarly under the law. After monopolies  or  monopsonies  have
    18  been  established,  it  is  typically too late to repair or mitigate the
    19  damage which has been done. Accordingly, mere attempts to create monopo-
    20  lies or monopsonies through  anti-competitive  conduct  should  also  be
    21  treated  as actions contrary to the interests of the people of the state
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 1812--A                          2
     1  of New York and  should  be  penalized  accordingly.    The  legislature
     2  further finds and declares that effective enforcement against unilateral
     3  anti-competitive conduct has been impeded by courts, for example, apply-
     4  ing  narrow  definitions  of monopolies and monopolization, limiting the
     5  scope of unilateral conduct covered by the federal anti-trust laws,  and
     6  unreasonably  heightening the legal standards that plaintiffs must over-
     7  come to establish violations of  those  laws.  The  legislature  further
     8  finds  and  declares  that one of the purposes of the state's anti-trust
     9  laws is to ensure that our labor markets are open and fair. The legisla-
    10  ture further finds and declares  that  anti-competitive  practices  harm
    11  great  numbers  of citizens and therefore must ensure that class actions
    12  may be raised in anti-trust suits.
    13    § 3. Section 340 of the general business law, as amended by chapter 12
    14  of the laws of 1935, subdivision 1 as amended by chapter 893 of the laws
    15  of 1957, subdivision 2 as amended by chapter 805 of the  laws  of  1984,
    16  subdivisions  3  and 4 as renumbered by chapter 502 of the laws of 1948,
    17  subdivision 5 as amended by chapter 333 of the laws of 1975 and subdivi-
    18  sion 6 as amended by chapter 31 of the laws of 1999, is amended to  read
    19  as follows:
    20    §  340.  Contracts  or  agreements  for  monopoly,  monopsony,  or  in
    21  restraint of trade illegal  and  void.  1.  Every  contract,  agreement,
    22  arrangement or combination whereby
    23    A  monopoly  or  monopsony  in  the  conduct of any business, trade or
    24  commerce or in the furnishing of any service in this state, is or may be
    25  established or maintained, or whereby
    26    Competition or the free exercise of any activity in the conduct of any
    27  business, trade or commerce or in the furnishing of any service in  this
    28  state is or may be restrained or whereby
    29    For  the  purpose of [establishing or maintaining any such monopoly or
    30  unlawfully interfering with the free exercise of  any  activity  in  the
    31  conduct  of  any business, trade or commerce or in the furnishing of any
    32  service in this state] engaging in the conduct specified in this section
    33  any business, trade or commerce or the furnishing of any service  is  or
    34  may be restrained, is hereby declared to be against public policy, ille-
    35  gal and void.
    36    2. (a) It shall be unlawful for any person or persons to monopolize or
    37  monopsonize,  or  attempt  to  monopolize  or monopsonize, or combine or
    38  conspire with any other person or persons to monopolize  or  monopsonize
    39  any business, trade or commerce or the furnishing of any service in this
    40  state.
    41    (b)  It  shall  be  unlawful for any person or persons with a dominant
    42  position in the conduct of any business, trade or commerce, in any labor
    43  market, or in the furnishing of any service in this state to abuse  that
    44  dominant position.
    45    (i)  In  any  action brought under this paragraph, a person's dominant
    46  position may be established by direct evidence, indirect evidence, or  a
    47  combination of the two.
    48    (1) Direct evidence may include, but is not limited to, the unilateral
    49  power  to  set  prices,  terms, conditions, or standards; the unilateral
    50  power to dictate non-price contractual terms  without  compensation;  or
    51  other  evidence  that  a person is not constrained by meaningful compet-
    52  itive pressures, such as the ability to degrade quality without  suffer-
    53  ing  reduction  in profitability. In labor markets, direct evidence of a
    54  dominant position may include, but is not limited to, the  use  of  non-
    55  compete  clauses  or no-poach agreements, or the unilateral power to set
    56  wages.

        A. 1812--A                          3
     1    (2) A person's dominant position may also be established  by  indirect
     2  evidence  such  as the person's share of a relevant market. A person who
     3  has a share of forty percent or greater of a relevant market as a seller
     4  shall be presumed to have a dominant position in that market under  this
     5  paragraph.  A  person  who has a share of thirty percent or greater of a
     6  relevant market as a buyer shall be presumed to have a dominant position
     7  in that market under this paragraph.
     8    (3) If direct evidence is sufficient to demonstrate that a person  has
     9  a  dominant  position  or  has abused such a dominant position, no court
    10  shall require definition of a relevant market in order to  evaluate  the
    11  evidence,  find  liability,  or  find that a claim has been stated under
    12  this paragraph.
    13    (ii) In any action brought under this paragraph, abuse of  a  dominant
    14  position may include, but is not limited to, conduct that tends to fore-
    15  close  or limit the ability or incentive of one or more actual or poten-
    16  tial competitors to compete, such as leveraging a dominant  position  in
    17  one  market  to  limit  competition in a separate market, or refusing to
    18  deal with another person with the effect of unnecessarily  excluding  or
    19  handicapping  actual  or  potential competitors. In labor markets, abuse
    20  may include, but is not limited to,  imposing  contracts  by  which  any
    21  person  is  restrained  from  engaging in a lawful profession, trade, or
    22  business of any kind, or restricting the freedom of  workers  and  inde-
    23  pendent contractors to disclose wage and benefit information.
    24    (iii)  Evidence  of  pro-competitive effects shall not be a defense to
    25  abuse of dominance and shall not offset or cure competitive harm.
    26    (c) (i) The attorney general is hereby empowered to adopt, promulgate,
    27  amend, and repeal rules, as such term is defined  in  paragraph  (a)  of
    28  subdivision  two  of section one hundred two of the state administrative
    29  procedure act, to carry out the purposes of paragraph (b) of this subdi-
    30  vision, including those considerations specified  in  the  findings  and
    31  declarations of the legislature for this act.
    32    (ii)  Before  any  such  rule shall take effect, at such time that the
    33  attorney general is prepared to file a notice of  adoption  pursuant  to
    34  subdivision  five of section two hundred two of the state administrative
    35  procedure act, the attorney general shall transmit a copy of the rule in
    36  its final form to the temporary president of the senate and the  speaker
    37  of the assembly and, in addition, shall provide any relevant information
    38  regarding the need for such rule. Such proposed rule, or proposed repeal
    39  of  a  rule, is subject to the denial by either house of the legislature
    40  and shall take the form of a resolution. Each house of  the  legislature
    41  shall  have  sixty days following the transmission of such rule to issue
    42  denial by resolution or take no action. Such rule shall not take  effect
    43  if  either  house  passes a resolution denying such proposed rule within
    44  the time prescribed by this subparagraph.
    45    (iii) The attorney general shall issue guidance on how it will  inter-
    46  pret  market  shares and other relevant market conditions to achieve the
    47  purposes of paragraph (b) of this subdivision while taking into  account
    48  the  important  role of small and medium-sized businesses in the state's
    49  economy.  The attorney general may issue other guidance with respect  to
    50  paragraph (b) of this subdivision.
    51    3. Subject to the exceptions hereinafter provided in this section, the
    52  provisions  of  this  article shall apply to licensed insurers, licensed
    53  insurance  agents,  licensed  insurance  brokers,  licensed  independent
    54  adjusters  and other persons and organizations subject to the provisions
    55  of the insurance law, to the extent not regulated by provisions of arti-
    56  cle twenty-three of the insurance law; and further provided, that  noth-

        A. 1812--A                          4
     1  ing  in  this  section  shall  apply to the marine insurances, including
     2  marine  protection  and  indemnity  insurance  and  marine  reinsurance,
     3  exempted  from  the  operation  of article twenty-three of the insurance
     4  law.
     5    [3.]  4. The provisions of this article shall not apply to cooperative
     6  associations, corporate or otherwise, of farmers, gardeners,  or  dairy-
     7  men,  including  live stock farmers and fruit growers, nor to contracts,
     8  agreements or arrangements made by such associations, nor to  bona  fide
     9  labor unions.
    10    [4.]  5. The labor of human beings shall not be deemed or held to be a
    11  commodity or article of commerce as such terms are used in this  section
    12  and nothing herein contained shall be deemed to prohibit or restrict the
    13  right of workingmen, including employees and independent contractors, to
    14  combine in unions, organizations and associations, not organized for the
    15  purpose of profit, or to bargain collectively concerning their wages and
    16  the  terms  and  conditions  of their employment. A bona fide collective
    17  bargaining agreement, or any  term  therein,  shall  not  be  considered
    18  evidence of a violation or dominance under this section.
    19    [5.]  6.  An  action  to recover damages caused by a violation of this
    20  section must be commenced within four years after the  cause  of  action
    21  has accrued. The state, or any political subdivision or public authority
    22  of  the  state, or any person who shall sustain damages by reason of any
    23  violation of this section, shall recover three-fold the  actual  damages
    24  sustained  thereby, as well as costs not exceeding ten thousand dollars,
    25  and reasonable attorneys' fees. At or before  the  commencement  of  any
    26  civil  action by a party other than the attorney-general for a violation
    27  of this section, notice thereof shall be served upon the attorney-gener-
    28  al. Where the aggrieved party  is  a  political  subdivision  or  public
    29  authority  of the state, notice of intention to commence an action under
    30  this section must be served upon the attorney-general at least ten  days
    31  prior  to  the commencement of such action. This section shall not apply
    32  to any action commenced prior to the effective date of this act.
    33    [6.] 7. In any action pursuant to this  section,  the  fact  that  the
    34  state, or any political subdivision or public authority of the state, or
    35  any  person  who  has  sustained  damages by reason of violation of this
    36  section has not dealt directly with  the  defendant  shall  not  bar  or
    37  otherwise limit recovery; provided, however, that in any action in which
    38  claims  are  asserted  against  a  defendant by both direct and indirect
    39  purchasers, the court shall take all steps necessary to avoid  duplicate
    40  liability,  including  but not limited to the transfer and consolidation
    41  of all related actions.  In  actions  where  both  direct  and  indirect
    42  purchasers  are  involved,  a  defendant shall be entitled to prove as a
    43  partial or complete defense to a claim  for  damages  that  the  illegal
    44  overcharge  has  been passed on to others who are themselves entitled to
    45  recover so as to avoid duplication of recovery of damages.
    46    8. Any damages recoverable pursuant to this section may  be  recovered
    47  in  any  action  which  a  court  may authorize to be brought as a class
    48  action pursuant to article nine of the civil practice law and rules.
    49    9. An arrangement, as this term is used in this article, includes, but
    50  is not limited to, a contract, combination, agreement or conspiracy.
    51    10. Premerger notification.
    52    (a) Any person acquiring, directly or indirectly, any  voting  securi-
    53  ties  or  assets  of  any other person, shall file notification with the
    54  attorney general pursuant to rules under paragraph (h) of this  subdivi-
    55  sion hereunder if:

        A. 1812--A                          5
     1    (i)  as  a result of such acquisition, the acquiring person would hold
     2  an aggregate total amount of the voting securities  and  assets  of  the
     3  acquired  person  in  excess of ten per centum of the current thresholds
     4  specified by the United States Federal Trade Commission pursuant  to  15
     5  U.S.C. § 18a(a)(2); and
     6    (ii)  the  acquiring or acquired person has assets or annual net sales
     7  within the state in excess of two and one-half per centum of the current
     8  thresholds specified by  the  United  States  Federal  Trade  Commission
     9  pursuant to 15 U.S.C. § 18a(a)(2)(A).
    10    (b)  The notification required under paragraph (a) of this subdivision
    11  shall be filed no later than sixty calendar days before the  closing  of
    12  the acquisition.
    13    (c)  The notification required under paragraph (a) of this subdivision
    14  shall identify:
    15    (i) All parties to the acquisition.
    16    (ii) The assets being transferred in the acquisition.
    17    (iii) The anticipated closing date of the acquisition.
    18    (iv) Persons subject to the requirements of this paragraph who file  a
    19  notification with the United States department of justice and the United
    20  States  federal  trade  commission  pursuant  to 15 U.S.C. § 18a et seq.
    21  shall comply with the requirements of this subdivision  by  filing  with
    22  the  attorney  general  the same materials filed with the aforementioned
    23  federal agencies, at the same time that they file those  materials  with
    24  those federal agencies.
    25    (d)    The  following  classes  of  transactions  are  exempt from the
    26  requirements of this section:
    27    (i) acquisitions of goods or realty transferred in the ordinary course
    28  of business;
    29    (ii) acquisitions of bonds, mortgages, deeds of trust, or other  obli-
    30  gations which are not voting securities;
    31    (iii)  transfers  to  or from a federal agency or a state or political
    32  subdivision thereof;
    33    (iv) transactions specifically exempted from the  provisions  of  this
    34  article; and
    35    (v)  such  other  acquisitions,  transfers, or transactions, as may be
    36  exempted under paragraph (h) of this subdivision hereunder.
    37    (e) Any information or documentary material filed  with  the  attorney
    38  general  pursuant  to  this  subdivision shall be exempt from disclosure
    39  under article six of the public officers law, and no such information or
    40  documentary material may be made public, except as may  be  relevant  to
    41  any administrative or judicial action or proceeding.
    42    (f)  Any  person,  or  any  officer, director, or partner thereof, who
    43  fails to comply with any provision of this subdivision shall  be  liable
    44  to  the  state for a civil penalty of not more than ten thousand dollars
    45  for each day during which such person is in violation of  this  section.
    46  Such  penalty may be recovered in a civil action brought by the attorney
    47  general.
    48    (g) In considering any transaction under this subdivision, the  attor-
    49  ney general shall consider such transaction's effects on labor markets.
    50    (h) The attorney general is hereby empowered to:
    51    (i) define the terms used in this subdivision;
    52    (ii)  exempt,  from  the  requirements of this subdivision, classes of
    53  persons, acquisitions, transfers, or transactions which are  not  likely
    54  to violate the provisions of this article; and
    55    (iii)  adopt,  promulgate,  amend,  and  rescind other rules and regu-
    56  lations to carry out the purposes of this subdivision.

        A. 1812--A                          6
     1    § 4. Section 341 of the general business law, as  amended  by  chapter
     2  333 of the laws of 1975, is amended to read as follows:
     3    §  341.  Penalty. Every person or corporation, or any officer or agent
     4  thereof, who shall [make or attempt to  make  or  enter  into  any  such
     5  contract, agreement, arrangement or combination or who within this state
     6  shall]  do or attempt to do, within this state, any act [pursuant there-
     7  to] declared unlawful under subdivision one and paragraph (a) of  subdi-
     8  vision two of section three hundred forty of this article, or in, toward
     9  or for the consummation thereof[, wherever the same may have been made],
    10  is guilty of a class [E] D felony, and on conviction thereof shall, if a
    11  natural  person,  be punished by a fine not exceeding one [hundred thou-
    12  sand] million dollars, or by  imprisonment  for  not  longer  than  four
    13  years, or by both such fine and imprisonment; and if a corporation, by a
    14  fine  of  not  exceeding  one  hundred million dollars. An indictment or
    15  information based on a violation  of  any  of  the  provisions  of  this
    16  section must be found within [three] five years after its commission. No
    17  criminal  proceeding barred by prior limitation shall be revived by this
    18  act.
    19    § 5. Section 342-a of the general business law, as amended by  chapter
    20  275 of the laws of 1962, is amended to read as follows:
    21    § 342-a. Recovery of civil penalty by attorney-general. In lieu of any
    22  penalty  otherwise  prescribed  for  a  violation of a provision of this
    23  article and in addition to an action pursuant to section  three  hundred
    24  forty-two  of  this article, the attorney-general may bring an action in
    25  the name and in behalf of the people of the state  against  any  person,
    26  trustee,  director,  manager or other officer or agent of a corporation,
    27  or against a corporation, foreign or domestic, to recover a  penalty  in
    28  the sum specified in section three hundred forty-one of this article for
    29  the  doing  in  this state of any act [herein] declared to be illegal in
    30  this article, or any act in, toward or for the making or consummation of
    31  any contract, agreement, arrangement or combination [herein]  prohibited
    32  by  this  article, wherever the same may have been made. The action must
    33  be brought within [three] five years after the  commission  of  the  act
    34  upon which it is based.
    35    §  6. Section 342-b of the general business law, as amended by chapter
    36  420 of the laws of 1975, is amended to read as follows:
    37    § 342-b. Recovery of damages  by  attorney  general.  In  addition  to
    38  existing  statutory  and  common  law authority to bring such actions on
    39  behalf of the state, [and] public authorities, and resident persons  and
    40  entities,  the  attorney  general may also bring action on behalf of any
    41  political subdivision or public authority of the state upon the  request
    42  of such political subdivision or public authority, or in the name of the
    43  state, as parens patriae, on behalf of persons and other entities resid-
    44  ing  in  the  state  of  New  York, to recover damages for violations of
    45  section three hundred forty of  this  article,  or  to  recover  damages
    46  provided  for  by  federal  law  for violations of the federal antitrust
    47  laws. In any class action the attorney general may bring  on  behalf  of
    48  [these  or  other  subordinate]  governmental entities, any governmental
    49  entity that does not affirmatively exclude itself from the action,  upon
    50  due notice thereof, shall be deemed to have requested to be treated as a
    51  member  of  the class represented in that action.  The attorney general,
    52  on behalf of the state of New York, shall be entitled to retain from any
    53  moneys recovered  in  such  actions  the  costs  and  expenses  of  such
    54  services.
    55    § 7. The general business law is amended by adding a new section 342-d
    56  to read as follows:

        A. 1812--A                          7
     1    § 342-d. Recovery of expert witnesses' fees and costs by attorney-gen-
     2  eral  and  private  litigants.  In  any action alleging a violation of a
     3  provision of this article, including actions brought  under  subdivision
     4  twelve of section sixty-three of the executive law, the attorney general
     5  and  private  litigants  shall recover reasonable fees and costs for its
     6  expert witnesses and consultants if  the  attorney  general  or  private
     7  litigants prevail in such action.
     8    § 8. This act shall take effect immediately.
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