New York’s Anti-Trust Experiment

February 2, 2022 at 9:46 am 1 comment

On January 12th a diverse group of 60 New York business leaders and legal experts wrote a letter urging the legislature not to pass S933-A Gianaris / A1812-A Dinowitz.  The legislation would establish a first in the nation European style framework for analyzing allegedly anti-competitive conduct and it would impact not only the Googles of the world but also would have a profound impact on the operations of small businesses including credit unions located in New York.  Here is a quick look at what the legislation would do and how it could impact your credit union. 

Currently, New York State anti-trust law is very similar to its federal counterpart.  Both prohibit monopolies which exercise their power to harm consumers.  This also means that businesses in New York are not put at a competitive disadvantage to companies based in competing states since federal law applies to everyone. 

This would all change if the legislature passes and the Governor signs this legislation.  Most importantly, the proposal would introduce an “abuse of conduct” standard under which both the Attorney General and class action lawyers could sue businesses for exercising a dominant position in a given marketplace.

Under the legislation, any business that has “a share of a relevant market of 40% or more” is presumed to have a dominant position.  Furthermore, a plaintiff is not required to provide a definition of a relevant market in order to establish liability. 

Let’s break this down a little.  It means that if you have a credit union that is the only institution providing services in a financially underserved area, be it parts of New York City or the Adirondacks, your credit union could find itself in the crosshairs of litigation.  And whereas traditional American anti-trust law allows defendants to defend themselves by demonstrating the advantages offered by their products and services (generally referred to as a “Rule Of Reason”) New York State would stipulate that “Evidence of pro-competitive effects shall not be a defense to abuse of dominance and shall not offset or cure competitive harm”.  In other words, any credit union would have to think long and hard about whether or not taking in a new SEG, moving into a new community or merging with a struggling neighbor is worth the risk, even though in almost all these examples, these actions expand the availability of financial services.  Furthermore, the legislation also imposes state level restrictions on merger activity that would apply to most credit union mergers.

The legislation is similar to federal proposals primarily intended to crack down on big tech and there are good arguments for updating certain aspects of our anti-trust law on the federal level.  But this is not the type of proposal that can be or should be implemented on the state level.  State courts will be analyzing wholly new legal concepts as opposed to relying on the century’s old analysis of existing anti-trust law and businesses will most likely deal with this uncertainty by more cautiously providing services that consumers may want. 

Entry filed under: Legal Watch, New York State, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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