Price gouging, hoarding, anti-competitive behavior: Congressman on need to protect consumers

Rhode Island Representative David Cicilline joins Yahoo Finance’s On The Move panel to discuss how the tech industry is handling antitrust probes and why he says most mergers should be banned during the coronavirus crisis.

Video Transcript

JULIE HYMAN: I want to turn, first of all, to something that you and some of your fellow members of Congress have been pushing for as part of stimulus packages. And that is regulations on mergers and acquisitions. And you say, they shouldn't be allowed right now, unless they involve the purchase of a severely distressed company. And I'm curious, first of all, what that means. What does severely distressed mean? Because obviously, you're seeing a lot of companies that are in various degrees of distress right now.

DAVID CICILLINE: Yes, I mean, what we're calling for-- first of all, thank you for having me. But what we're calling for is to be sure that in this moment in the middle of a global pandemic that we don't allow the anti-trust agencies to jam through mergers. That takes attention away from what they should be focused on, and that is price gouging and affording in other anti-competitive behavior. What we don't want to see is market consolidation that will have implications for the economy for a very long time. We saw that after the Great Recession.

There are already investors out there saying, there are tremendous opportunities out there, sort of licking their chops. So what we were trying to craft is some language that says, look, unless it's a company that's in bankruptcy proceedings or actually failing, let's just pause and not allow this pandemic to be an opportunity to exploit the acquisition of companies or to promote mergers. And instead, have the agency's focus on the most immediate harm to consumers, price gouging, courting, other anti-competitive behavior.

ADAM SHAPIRO: Hi, it's Adam Shapiro. Thank you so much.

DAVID CICILLINE: Hi, Adam.

ADAM SHAPIRO: An example, though, of what you're talking about and neither company clearly is in bankruptcy, Amazon AMC. You know, if that were a true story that Amazon's looking at acquiring the movie theater chain, now the movie theater business is struggling. And wouldn't what you're proposing prohibit a company that's healthy, like Amazon, from assisting a company that might go out of business from going out of business?

DAVID CICILLINE: No, actually, there's some language in the proposal that would allow for a waiver in certain circumstances. But again, we have antitrust agencies, the DOJ, and the FTC, that have limited resources, limited bandwidth. And all we're saying is in the midst of a global pandemic, those resources ought to be directed at things which will protect consumers from the consequences of price gouging, of hoarding, of other anti-competitive behavior.

And this is not a moment to facilitate a bunch of mergers and jam them through. So it's not prohibiting them. It's simply saying, put them on pause. Focus the attention on the greatest harm to consumers. Again, it has a series of exemptions. If it's an actual merger, which is required, because a firm is failing or in bankruptcy, proceedings, those would be exempt.

But in general, it's calling for a pause on this action during the middle of a global pandemic that is requiring out agencies to do a lot of other very important work. What we don't want to see is what we saw after the Great Recession, tremendous consolidation in the banking and the airline industries as a result of this consolidation, a lot more market power, fewer choices for consumers, higher prices, less innovation. We don't want the same thing to happen after the horrible pandemic that were in the midst of.

JESSICA SMITH: Congressman, Jessica Smith, here. I know that we're hearing we could get the house version of phase four sometime early this week. Are you optimistic that you'll be able to get this proposal in that legislation considering the pushback that we are seeing from some FTC commissioners and from Republican lawmakers?

DAVID CICILLINE: Yeah, I mean, we're going to continue to make the case about why this is important. This is obviously one of many proposals I'm fighting for. In CARES 2, we're fighting hard to be sure that we take care of our heroes on the frontlines, our first responders, health care workers, police officers, firefighters, making sure that there's hazard pay for people that are keeping us safe during the pandemic, making sure we support state and local governments, so they can support our heroes on the front lines, additional help for our hospitals, testing, testing, testing. So you know, I'm advocating for a number of proposals, and I hope I'll get them all in. But we'll see what the bill looks like when we reconvene in Washington.

RICK NEWMAN: Congressman, hi. Rick Newman. Can you tell us where you see the outcome in terms of the liability shield for businesses that Senate Republicans want to be in this next bill, so they can reopen without fearing they're going to get sued by customers or workers?

DAVID CICILLINE: Well, I mean, I think it's clear that there's a real concern from the business community that they have an ability to reopen safely without facing liability. Of course, the best way to ensure that doesn't happen is for safe procedures to be in place, to have the federal government and the scientific and public health community give good guidance to businesses and organizations about the way you should reopen safely. So I think that helps kind of having a standard of care as you think about questions about liability.

But I think one of the difficulties is we're dealing with an administration frankly that hasn't provided good guidance. Or when they have attempted to provide guidance, the president has squashed it and not allowed it to be shared with the American people. But any discussion about a waiver of liability has to begin with a recognition that there's a standard or protocol that must be followed in order to keep people safe, and we don't even have that from the Trump administration yet.

JESSICA SMITH: Congressman, turning to the anti-trust investigation that you're leading, you recently asked Amazon CEO Jeff Bezos to come and testify. I believe, last week, you said you did not have a commitment from him yet. Has that changed, and just what are you hearing from Amazon?

DAVID CICILLINE: No, I mean, look, this investigation has been underway for about eight months. I said from the very beginning that it would be impossible for me to imagine that we would conclude the investigation without hearing from the CEOs of the large technology platforms, who are often the decision makers of these large companies. This has been a very bipartisan effort. I've been in contact with all of the CEOs from the beginning of the investigation.

All of them pledged their cooperation, and they have been cooperating. I expect all of them will testify before this subcommittee before the investigation is concluded. The one exception to that has been Mr. Bezos, who has expressed a reluctance to do so, and we wrote to him in light of some testimony given by one of the officials that his company that, I think, requires explanation.

And we communicate to them that we expect that he would come before the committee to answer questions, so that we can complete our investigation. And of course, we indicated that we expect and would hope that he would do so voluntarily as, I think, any CEO would. But that we were, of course, prepared, if necessary, to use compulsory process to compel his attendance. And again, that was a bipartisan communication from the subcommittee.

JULIE HYMAN: Congressman, just to follow up a little bit on Jeff Bezos and Amazon, obviously, a lot of business of Congress has been tabled for now because of the urgency of dealing with coronavirus. But likewise, Amazon, if anything, has grown in importance to a lot of Americans right now when they're getting things delivered at home. And I know that this particular aspect of the antitrust investigation was mostly centered on third party sellers, Amazon allegedly gathering Intel from them to develop its own products. But I am curious if there are any other potential abuses that you're sort of concerned about amidst this pandemic now on the part of Amazon or any of its competitors for that matter.

DAVID CICILLINE: Well, I think what we've seen is during the pandemic, the growing importance of the large digital platforms, which is why this investigation is so critical. Because what we want is a competitive marketplace. We want the digital marketplace to have real competition. So we can make room for the next Amazon, or Facebook, or Google, so that there's real competition. Because we know it drives down consumer prices. It creates more choices.

It will protect privacy and better ways. It will promote innovation. So the absence of competition in the digital marketplace and the kind of monopoly power or market share that some of these large technology platforms have, we know impedes innovation, reduces choices, has led to significant decreases in the privacy of consumers and misuse of their data. So I think, if anything, the pandemic has underscored the importance of the work we're doing to really understand how this marketplace works, and what actions we can take to promote competition and make room for the next great technology platform.

ADAM SHAPIRO: I want to just turn the next question very quickly to stimulus. That might be coming. Nancy Pelosi, allegedly working on the $750 billion package to help states with the financial problems that they're facing. And yet, Steve Mnuchin, Secretary of the Treasury, this morning on CNBC was saying, we will not reward states who have manage their money poorly. They're talking about public pensions, but a lot of Republican run states are in trouble. So why would the administration want to punish Republicans, as well as democratic states?

DAVID CICILLINE: Well, I mean, it's a silly argument. The states that are suffering right now-- and that's all of them. --are not sovereign because they're mismanaged. They're suffering because of a global health pandemic. And they have essentially shut down their economies properly so, because they have followed the directions of their governors to be sure they have social distancing, and quarantining, and alike.

It's the only way you can defeat this pandemic, so they've done that. And they should, because we need to keep people alive. But as a consequence, they've seen their revenues decline dramatically, so it's essential that we support states and local governments. And it's not to support some bureaucracy. It's to support health care workers, police officers, firefighters, those on the front, sanitation workers, grocery clerks, people who are keeping our economy open and keeping us safe. And at the notion that you're somehow rewarding bad behavior is an absurdity.

This is making certain that our states and cities can be in a position to reopen economies to get the country back to work. You cannot do that without police officers, and firefighters, and first responders. And the idea in some states that county hospitals, they are preparing to layoff health care professionals because they don't have the money in the middle of a global pandemic is obscene.

So Mr. Mnuchin, Secratary Mnuchin is wrong. Mitch McConnell is wrong. They federal government has a responsibility to help the heroes on the front of this pandemic, and the house Democrats are fighting hard to make sure that is reflected in the CARES 2 that we're working on right now.