When you go grocery shopping, you can often find a dizzying array of products. But when you look closely at the small print on the packaging, it’s often a handful of companies that own the major brands up and down the aisle. That makes it easier for those conglomerates to push up prices, including food and other essentials. For markets to work well for consumers and workers, companies need to compete. 

When a big merger is announced on Wall Street, it isn’t necessarily a done deal. Federal agencies like the Federal Trade Commission and the Department of Justice are supposed to review and block mergers that harm competition. But federal and state antitrust laws also empower state attorneys general to take a close look at proposed mergers. If a deal threatens to push up prices, undermine workers, or harm competition, states can intervene to stop it from going forward.  

There’s widespread concern that federal agencies aren’t meeting their obligations to closely review mergers and are favoring billionaires over consumers – or are even turning a blind eye to problematic mergers based on political favoritism. That’s why state attorneys general are stepping up to make sure there’s a level playing field. Here’s how it works: 

State AGs have the power to enforce antitrust laws

To ensure that federal agencies didn’t have a monopoly on enforcement, the Clayton Act authorizes state attorneys general to go to court to block a proposed merger. Individual states also have their own antitrust laws. 

For example, state attorneys general filed actions in multiple states to block a supermarket megamerger. These actions relied on state law, as well as federal antitrust law. Ultimately, the merger – and the inevitable accompanying grocery price hikes – were blocked. 

Importantly, a state attorney general typically has jurisdiction if the merging companies do business in their state. Companies can’t evade merger laws by moving their headquarters to a different state. 

State AGs can intervene when the U.S. Department of Justice signs off on weak – or potentially harmful and corrupt – merger settlements

When federal prosecutors investigate a merger, sometimes it leads to a settlement, where the merging companies agree to sell off certain businesses that would otherwise allow them to corner a market. These settlements require court approval. 

Under the Tunney Act, a court can only approve a settlement after the public has had a chance to review and weigh in on the key terms and conditions. The Tunney Act is a post-Watergate law enacted by Congress in 1974 to ensure that antitrust settlements reached by the Justice Department are based on the merits rather than undue influence. Courts recognize the important role that state attorneys general have in this process. 

Recently, the U.S. Department of Justice struck a deal regarding a major merger involving wireless internet. After public reports that uncovered alleged influence-peddling between lobbyists and the Justice Department, state attorneys general moved to intervene, which the court agreed to, in order to allow an investigation of the settlement. 

States AGs can coordinate closely to protect consumers, workers, and businesses that want to fairly compete.

Given the lax enforcement at the federal level, state attorneys general can closely coordinate with each other to detect and deter illegal mergers that harm the public. They can scrutinize weak settlements struck by federal regulators. This work will not only protect people from unfair competition – but will also rein in questionable settlements motivated by political favoritism. 

States enforce other laws that protect the public from price hikes and other unfair competition. Some state attorneys general must affirmatively approve mergers in certain sectors of the economy, like health care. Other states require merging companies to file reports, similar to the federal Hart-Scott-Rodino Act, about a pending merger before the deal closes.   

Companies seeking to merge should be proactive and provide all appropriate information to state attorneys general. Consumers and businesses should contact their state attorney general’s office about potential mergers that could harm competition. 

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Rohit Chopra is the former Director of the Consumer Financial Protection Bureau and a former Commissioner on the Federal Trade Commissioner. He serves as a senior adviser to the Progressive State Leaders Committee. 

Progressive State Leaders Committee 

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