RESEARCH TRIANGLE PARK – Attorneys general in North Carolina and 47 other states want to hammer social media giant Facebook with a wide variety of very painful financial penalties and possible divestitures in a wide-ranging antitrust suit filed on Wednesday.
They also want limits on future acquisitions and “equitable relief as this Court may deem appropriate to restore competitive conditions and lost competition.”
“Facebook is a prime example of what happens when a company gets too big and too powerful – people suffer,” said NC Attorney General Josh Stein in a satement. “For years, Facebook has used its monopoly power as a social networking website to stifle competition and innovation and to sell alarming amounts of user data to make money, all at the expense of the many people who use its platform. North Carolinians deserve better – they deserve choice and they deserve better privacy. That’s why I’m suing Facebook and why I’ll do everything in my power to protect competition and consumers.”
Citing two key pieces of legislation regarding business practices – the Sherman Act, the Clayton Antitrust Act, the Hart-Scott-Rodino Act – the AGs spell out in detail the remedies they are seeking in the suit filed wih the United States District Court for the District of Columbia.
But let’s start with definitions of the three Acts in order to set the stage for what the AGs want. (Bear in mind, the Federal Trade Commission has launched a Facebook action, too.)
First the Sherman Act:
“Whereas the Sherman Act only declared monopoly illegal, the Clayton Act defined as illegal certain business practices that are conducive to the formation of monopolies or that result from them,” according to Britannica.
Next, the Clayton Act:
“The Clayton Antitrust Act, passed in 1914, continues to regulate U.S. business practices today. Intended to strengthen earlier antitrust legislation, the act prohibits anticompetitive mergers, predatory and discriminatory pricing, and other forms of unethical corporate behavior,” says Investopedia.
Notes Britannica: “The Clayton Act and other antitrust and consumer protection regulations are enforced by the Federal Trade Commission.”
And Hart-Scott-Rodino:
“The Hart-Scott-Rodino Act established the federal premerger notification program, which provides the FTC and the Department of Justice with information about large mergers and acquisitions before they occur. The parties to certain proposed transactions must submit premerger notification to the FTC and DOJ,” says the FTC.
The penalties
With those definitions in mind, the specific punishments the AG want are:
1. That Facebook be adjudged to have violated Section 2 of the Sherman Act
2. That Facebook be enjoined and restrained from continuing to engage in any anticompetitive conduct and from adopting in the future any practice, plan, program, or device having a similar purpose or effect to the anticompetitive actions set forth above
3. That Facebook be enjoined and restrained from making further acquisitions valued at or in excess of $10 million without advance notification to Plaintiff States
4. That Facebook be enjoined and restrained from making further acquisitions without such disclosures to Plaintiff States as would be required to the federal government under the Hart-Scott-Rodino Act for transactions falling within the scope of such Act
5. That Facebook’s acquisition of Instagram [acquired in 2012 for $1 billion] be adjudged to be in violation of Section 7 of the Clayton Act
6. That Facebook’s acquisition of WhatsApp [acquired in 2014 for $19 billion] be adjudged to be in violation of Section 7 of the Clayton Act
7. That each Plaintiff State be awarded its costs, including reasonable attorneys’ fees
8. That the Court order such other and further equitable relief as this Court may deem appropriate to restore competitive conditions and lost competition and to prevent future violations, including divestiture or reconstruction of illegally acquired businesses and/or divestiture of Facebook assets or business lines.
