Elected officials often preach that small businesses are the backbone of our economy, rightly acknowledging that more needs to be done to support them. Unfortunately, they often turn around and bury them in paperwork, legal and administrative costs every time they pass a new rule or regulation. We’re seeing that now in Albany, where legislators are considering a bill that will punish innovation, stop small businesses from growing and drive out larger ones upon which small companies depend.
The 21st Century Antitrust Act, modeled off of a similar law in the European Union, will make New York the only state in the country where the government or an attorney for a competitor can claim a business is “dominant” in its local market and then bury it in litigation. It is ostensibly aimed at preventing big corporations from abusing their power, but it impacts all businesses across the state, regardless of size. If passed, New York’s antitrust regime would target more than just monopolies; ours would become the only state in the country to target any business considered dominant.
Imagine you own a company that invests in research and development to build a new product people love. Even if you built it yourself, if you are the only one selling it, you could face legal retribution. Why would any owner launch a new product, or relocate their business here?
This bill comes out of a national movement aimed at breaking up Big Tech companies. Though misguided advocates claim it is designed to protect small businesses, it turns out we are most vulnerable. The bill establishes an arbitrary threshold where certain transactions above $10 million would set off an investigation by the attorney general’s office. This is one-tenth the threshold at the national level.
In New York, there are more than 27,000 businesses with less than 100 employees that could be wrapped up in this new regulatory burden. It could be a local hardware store or a health food store in a community with no other options, or local restaurants and shops that are still climbing out of the stops and starts of the pandemic.
The law would also hurt consumers at a time of historically high inflation. Consumer confidence has declined over the past 12 months in the city, putting us behind other major metro areas including San Francisco, Los Angeles, Miami and Houston. A business that offers a discount could be accused of abusing their position in the market. While a deal might be beneficial to consumers and help New York City-based small businesses compete nationally, that would not be a legal defense against prosecution under this bill.
The thing Albany seems to ignore is that we already have statutes against monopolies and corporations abusing their power. The federal government has mountains of laws addressing these issues and entire agencies to enforce them. They’ve been doing it for a century and have deep expertise in understanding when and where action is needed. New York would be taking this on for the first time, so we’re almost guaranteed to see overreach and abuse if this law is passed.
If the Legislature passes this bill and the governor signs it into law, it will be much harder for our state to compete for entrepreneurs, small businesses will spend more time and money defending themselves against litigation, and consumers will pay the price. New York is already one of the most litigious and expensive states for business owners.
Our small business ecosystem is in a fragile state. We are competing with cities in Texas and Florida for taxpayers and businesses. Unemployment in New York is still nearly double the national average. Getting people back to work means having businesses in New York able to employ them, so the threat of leaking more of them to rival markets threatens not only our economy but our residents and broader tax base.
Albany needs to focus on fostering an environment that drives growth and encourages entrepreneurship while removing the red tape and punitive measures that financially handcuff business owners with legal fees. The 21st Century Antitrust Act is a political solution in search of a problem, not a response to any tangible issues.
This is a time to rebuild our state’s economy. With our public safety continuously under siege, we’re on the knife’s edge. Employees are reluctant to return to offices, making employers question whether they need to spend big on expensive commercial real estate in Midtown. Meanwhile, the small businesses that rely on those office workers and are vendors to big companies have seen revenues plummet. With the destabilization we’re experiencing, we don’t need another punch.
Albany should say no to the 21st Century Antitrust Act.
Grech is president and CEO of the Queens Chamber of Commerce. Zogby is owner of RDS Same Day Delivery and a member of the Queens Chamber of Commerce.
