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"The Delaware lawmakers that enacted S.B. 21 are lapdogs for corporations and Musk," said one expert at the Open Markets Institute.
While Democratic Gov. Matt Meyer declared that "Delaware is the best place in the world to incorporate your business, and Senate Bill 21 will help keep it that way," critics reiterated concerns about the corporate-friendly state legislation he signed this week.
The Delaware House of Representatives sent the Senate-approved S.B. 21 to Meyer's desk on Tuesday in a 32-7 vote, with two members absent. The Delaware Business Timesreported that the governor "arrived in Dover to sign the measure into law less than two hours after it passed," and "the bill signing was closed to the press."
The bill sailed through the Delaware General Assembly despite anti-monopoly, economic, and legal experts blasting it as a "corporate insider power grab" and accusing state legislators of choosing "billionaire insiders—like Elon Musk and Mark Zuckerberg—over pension funds, retirement savers, and other investors."
Delaware Working Families Party (WFP) political director Karl Stomberg said in a Wednesday statement that "at a time when rank-and-file Democrats across the country are begging their leaders to stand up to" President Donald Trump and Musk, his billionaire adviser, Democratic lawmakers in the state "just gave Musk a $56 billion handout."
That's a reference to Musk's 2018 compensation package for his electric vehicle maker, Tesla, which a Delaware judge ruled against, prompting the richest billionaire on Earth to ditch the state and encourage other business leaders to do the same. Fears of a potential "Dexit" led to lawmakers' frantic effort to pass S.B. 21.
"The Working Families Party has been standing up against this proposed bill for weeks now, and we recognize the need to fight back against corporate overreach in our government," said Stomberg. "WFP electeds proposed serious amendments to address our concerns with the bill that would protect the people of Delaware, but the Democrats chose to side with Musk and vote them down."
"This bill is an indictment of the failed Delaware Way, which continues to allow big corporations and the ultrawealthy like Elon Musk and Mark Zuckerberg to enrich themselves at the expense of working people," added Stomberg.
Zuckerberg is the CEO of Meta, Facebook and Instagram's parent company. CNBC recently revealed that "a day after The Wall Street Journal published its story on Meta considering a Delaware departure, Meyer, who was brand new to the job, convened an online meeting with attorneys from law firms that have represented Meta, Musk, Tesla, and others in shareholder disputes in the state, according to public records obtained by CNBC. Other attendees included members of the Delaware Legislature."
"The following day, records show, Meyer invited a second group to meet with him and new Secretary of State Charuni Patibanda-Sanchez. That invitation went to Kate Kelly, Meta's corporate secretary, and to Dan Sachs, the company's senior national director of state and local policy," according to CNBC. "The invite also went to James Honaker, an attorney with Morris Nichols, a firm that's represented Meta in federal court in Delaware, and to William Chandler, former chancellor of the Delaware Court of Chancery, who is now part of Wilson Sonsini's Delaware litigation practice."
Just weeks after those meetings, the governor urged state lawmakers to swiftly pass S.B. 21. The Lever's Luke Goldstein wrote Wednesday that "the timing of the emails obtained by CNBC reveals clear motivations driving the current law which was rushed before the Legislature last month by the new governor: to let top executives off the hook for legal liabilities."
In earlier reporting, Goldstein highlighted that "Delaware, which has long been perceived as a billionaire playground and corporate tax haven, is the incorporation home to more than 60% of all Fortune 500 companies. That means, if enacted, the wide-ranging regulatory handouts in the bill will have sweeping consequences for corporate behavior across the country."
The Lever's founder, David Sirota, on Wednesday lamented the limited attention the Delaware law is receiving, compared with a major national security breach involving several top Trump officials' unsecure group chat about war plans. As he put it, "Cannot overstate how significant this is—while the national media is focused on the D.C. drama, a group of Democrats off the radar in a tiny state just radically shifted more power to the planet's largest corporations via world-changing legislation."
Daniel Hanley, senior legal analyst at the Open Markets Institute, said Wednesday that "the Delaware lawmakers that enacted S.B. 21 are lapdogs for corporations and Musk. How this one state came to control practically all of American corporate law is a long story, but regardless, Congress can and should take the power away."
"For far too long, Live Nation-Ticketmaster has acted as the mafia boss of the live events industry—using its power to rip off fans with sky-high prices and junk fees, exploit musicians and artists, and bully workers," an expert said.
The U.S. Department of Justice and 30 state attorneys general filed an antitrust lawsuit on Thursday against entertainment company Live Nation—and its subsidiary Ticketmaster—calling it an "illegal monopoly," in a move celebrated by public interest groups.
The complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Live Nation engages in exclusionary conduct, barring competitors from entering the industry or expanding their businesses, which leads to higher ticket prices for concertgoers and a smaller take for performers and small-business owners.
U.S. Attorney General Merrick Garland, who leads the DOJ, said in a statement that the company "relies on unlawful, anti-competitive conduct to exercise its monopolistic control over the live events industry." He said the monopoly is bad for fans, artists, promoters, and venues. "It is time to break up Live Nation-Ticketmaster," he said.
Today’s lawsuit by the Justice Department Antitrust Division is an enormous step forward in preventing one company from dictating the ebbs and flows of an entire industry. pic.twitter.com/A2n5NAQJrR
— U.S. Department of Justice (@TheJusticeDept) May 23, 2024
The DOJ's statement cited seven specific tactics that the company has used to eliminate competition:
The 2010 merger of Live Nation and Ticketmaster allowed the merged firm to gain dominance over the industry by combining venue-operating and ticketing, and it used its dominance to wield power by, for example, threatening to boycott bands unless they used Ticketmaster, according to a Thursday statement from the American Economic Liberties Project (AELP).
"Today is a historic, long-awaited day for fans, artists, and independent businesses in the live events industry—the Department of Justice is officially seeking to break up one of America's most infamous monopolies," said Morgan Harper, AELP's director of policy and advocacy. "For far too long, Live Nation-Ticketmaster has acted as the mafia boss of the live events industry—using its power to rip off fans with sky-high prices and junk fees, exploit musicians and artists, and bully workers and small-business owners in the industry."
The lawsuit comes amid a wave of antitrust action by the Biden administration, led by the DOJ and the Federal Trade Commission (FTC), whose chairperson, Lina Khan, has been a prominent critic of Big Tech and monopolistic practices. The DOJ has investigated UnitedHealth Group, the world's largest health insurance company, and filed suits against Apple and Google, while the FTC has taken on Amazon, among others.
While the antitrust actions have faced pushback, public interest groups have applauded them—and pushed for similar action to be taken in the entertainment industry, as the DOJ did on Thursday. Sandeep Vaheesan, legal director of Open Markets Institute, said in a statement that the new suit could be a "critical blow" for Live Nation, to the benefit of the American public.
"Through a series of acquisitions and coercive tactics, Live Nation has unfairly dominated the promotion, hosting, and ticketing of concerts for years to the great detriment of artists, fans, and independent businesses," Vaheesan said. "Critically, rather than attempt to remedy this monopoly through surgical fixes, the government wisely seeks to terminate Live Nation's control of the industry through a breakup of this behemoth."
Advocates praised the FTC "for taking a strong stance against this egregious use of corporate power, thereby empowering workers to switch jobs and launch new ventures, and unlocking billions of dollars in worker earnings."
U.S. workers' rights advocates and groups celebrated on Tuesday after the Federal Trade Commission voted 3-2 along party lines to approve a ban on most noncompete clauses, which Democratic FTC Chair Lina Khansaid "keep wages low, suppress new ideas, and rob the American economy of dynamism."
"The FTC's final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market," Khan added, pointing to the commission's estimates that the policy could mean another $524 for the average worker, over 8,500 new startups, and 17,000 to 29,000 more patents each year.
As Economic Policy Institute (EPI) president Heidi Shierholz explained, "Noncompete agreements are employment provisions that ban workers at one company from working for, or starting, a competing business within a certain period of time after leaving a job."
"These agreements are ubiquitous," she noted, applauding the ban. "EPI research finds that more than 1 out of every 4 private-sector workers—including low-wage workers—are required to enter noncompete agreements as a condition of employment."
The U.S. Chamber of Commerce has suggested it plans to file a lawsuit that, as The American Prospectdetailed, "could more broadly threaten the rulemaking authority the FTC cited when proposing to ban noncompetes."
Already, the tax services and software provider Ryan has filed a legal challenge in federal court in Texas, arguing that the FTC is unconstitutionally structured.
Still, the Democratic commissioners' vote was heralded as a "seismic win for workers." Echoing Khan's critiques of such noncompetes, Public Citizen executive vice president Lisa Gilbert declared that such clauses "inflict devastating harms on tens of millions of workers across the economy."
"The pervasive use of noncompete clauses limits worker mobility, drives down wages, keeps Americans from pursuing entrepreneurial dreams and creating new businesses, causes more concentrated markets, and keeps workers stuck in unsafe or hostile workplaces," she said. "Noncompete clauses are both an unfair method of competition and aggressively harmful to regular people. The FTC was right to tackle this issue and to finalize this strong rule."
Morgan Harper, director of policy and advocacy at the American Economic Liberties Project, praised the FTC for "listening to the comments of thousands of entrepreneurs and workers of all income levels across industries" and finalizing a rule that "is a clear-cut win."
Demand Progress' Emily Peterson-Cassin similarly commended the commission "for taking a strong stance against this egregious use of corporate power, thereby empowering workers to switch jobs and launch new ventures, and unlocking billions of dollars in worker earnings."
While such agreements are common across various industries, Teófilo Reyes, chief of staff at the Restaurant Opportunities Centers United, said that "many restaurant workers have been stuck at their job, earning as low as $2.13 per hour, because of the noncompete clause that they agreed to have in their contract."
"They didn't know that it would affect their wages and livelihood," Reyes stressed. "Most workers cannot negotiate their way out of a noncompete clause because noncompetes are buried in the fine print of employment contracts. A full third of noncompete clauses are presented after a worker has accepted a job."
Student Borrower Protection Center (SBPC) executive director Mike Pierce pointed out that the FTC on Tuesday "recognized the harmful role debt plays in the workplace, including the growing use of training repayment agreement provisions, or TRAPs, and took action to outlaw TRAPs and all other employer-driven debt that serve the same functions as noncompete agreements."
Sandeep Vaheesan, legal director at Open Markets Institute, highlighted that the addition came after his group, SBPC, and others submitted comments on the "significant gap" in the commission's initial January 2023 proposal, and also welcomed that "the final rule prohibits both conventional noncompete clauses and newfangled versions like TRAPs."
Jonathan Harris, a Loyola Marymount University law professor and SBPC senior fellow, said that "by also banning functional noncompetes, the rule stays one step ahead of employers who use 'stay-or-pay' contracts as workarounds to existing restrictions on traditional noncompetes. The FTC has decided to try to avoid a game of whack-a-mole with employers and their creative attorneys, which worker advocates will applaud."
Among those applauding was Jean Ross, president of National Nurses United, who said that "the new FTC rule will limit the ability of employers to use debt to lock nurses into unsafe jobs and will protect their role as patient advocates."
Angela Huffman, president of Farm Action, also cheered the effort to stop corporations from holding employees "hostage," saying that "this rule is a critical step for protecting our nation's workers and making labor markets fairer and more competitive."