Reps. Greg Stanton and Scott Fitzgerald of Wisconsin have introduced a bipartisan amendment to the America COMPETES Act aimed at safeguarding against foreign governments such as China using state-sponsored businesses to wrongfully influence U.S. markets, steal intellectual property and suppress competition.

“The America COMPETES Act will turbocharge American technological innovation—but we can’t compete unless we ensure the playing field is level for U.S. companies,” said Stanton. “We have to stand up for American businesses and consumers and ensure that Chinese government-backed enterprises cannot distort our markets and jeopardize our national security.”

The amendment is based on the bipartisan Foreign Merger Subsidy Disclosure Act introduced by Stanton, Fitzgerald and Reps. Barry Loudermilk of Georgia and Jackie Speier of California. It would require merging companies operating in the United States to disclose information about any financial support or subsidies provided by a foreign government to U.S. antitrust regulators, the Federal Trade Commission, and the Department of Justice Antitrust Division.

The bill builds on a recommendation from the bipartisan U.S.-China Economic and Security Review Commission. In its 2020 report to Congress, the commission recommended the FTC have a system in place to determine how proposed transactions are influenced by such foreign government support.

State Owned Enterprises and companies that receive foreign subsidies may take anticompetitive actions such as predatory pricing because they do not need to generate a profit, potentially distorting markets even more than their private counterparts. “U.S. workers and companies, no matter how innovative and efficient, struggle to compete when the Chinese government so decisively tilts the playing field in favor of Chinese companies. . . and when U.S. companies are granted access to the Chinese market, it is at the cost of transferring valuable intellectual property to their Chinese counterparts,” the commission wrote.

Antitrust regulators must be able to recognize when heavily subsidized, government-owned companies harm competition, particularly when China uses SOEs to acquire American emerging technologies and intellectual property in areas in which it seeks to surpass and suppress U.S. companies

“Failure to appreciate the gravity of this challenge and defend U.S. competitiveness would be dire,” the commission warned. “Because these emerging technologies are the drivers of future growth and the building blocks of future innovation, a loss of leadership today risks setting back U.S. economic and technological progress for decades.”