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> Congress delegated some of its constitutional authority over foreign commerce to the President in 1988, explicitly empowering the President to prohibit merger

by mcherm 6y ago

> Congress delegated some of its constitutional authority over foreign commerce to the President in 1988, explicitly empowering the President to prohibit mergers, acquisitions, or takeovers that threaten national security. TikTok's acquisition by ByteDance falls under that authority. However, Congress cannot delegate a power they do not have. The US Constitution specifically states that: > No Bill of Attainder [law to punish a particular person or company, rather than those who meet certain categories] [...] shall be passed. > No person [that includes corporations] shall [...] be deprived of life, liberty, or property, without due process of law These combine to limit the degree to which Congress can decide to just punish a certain company. For instance, they can certainly pass a law saying that any company that threatens national security must be sold or cease doing business. But I believe under current legal precedents Congress could NOT pass a law saying that TikTok must be sold (for no reason... just because Congress doesn't like it) or that all companies that are owned by Democrats must be sold. Now, if TikTok actually threatens national security, then no one questions whether the President has the authority to order it sold. But "due process" requires that the decision of whether it threatens national security be made on the basis of some reasoning. They don't have to necessarily be RIGHT about whether it threatens national security, but they do at least have to have some reason for believing that it does. ByteDance claims that the decision was completely arbitrary and based on nothing more than "the company is based in China". If that is true, then this is reminiscent of the Japanese internment camps in WWII -- nothing but plain racism on the part of the government. If that is NOT true, and TikTok threatens national security (not just Donald Trump's ego), then of course it should be sold. I look forward to finding out the truth of the matter.

mmmmmbop 6y ago
You are spot-on about the constitution guaranteeing that laws must not be passed just to punish a certain company. What I believe you are missing, however, is that there is existing law that the divesting order is based on. Any acquisition involving foreign commerce is subject to the approval of the CFIUS (Committee on Foreign Investment in the United States). Following is an explanation taken from a recent Congressional Research Service report [1] (page 5). "These regulations created an essentially voluntary system of notification by the parties to an acquisition [...]. Despite the voluntary nature of the notification, firms largely comply with the provision, because the regulations stipulate that foreign acquisitions that are governed by the Exon-Florio review process that do not notify the committee remain subject indefinitely to divestment or other appropriate actions by the President. The regulations make it clear that the President alone determines 'whether a transaction threatens national security.'" When ByteDance acquired TikTok, they chose not to undergo that review. This was their legal right. However, that made their acquisition liable to be retroactively disallowed by the President. [1] https://fas.org/sgp/crs/natsec/RL33312.pdf https://fas.org/sgp/crs/natsec/RL33312.pdf
- SergeAx 6y ago
  I am quite inexperienced in US law, but are you just told that acquisition of one foreign company by another foreign company should be reviewed by some random US committee?!
  - mmmmmbop 6y ago
    Of course the U.S. has no authority over any two foreign companies that do no business within the country. However, if one of the two companies engages in interstate commerce in the U.S. -- which TikTok does -- it is considered to be a U.S. business [1] for the purposes of the CFIUS review. [1] https://casetext.com/regulation/code-of-federal-regulations/title-31-money-and-finance-treasury/subtitle-b-regulations-relating-to-money-and-finance-continued/chapter-viii-office-of-investment-security-department-of-the-treasury/part-800-regulations-pertaining-to-certain-investments-in-the-united-states-by-foreign-persons/subpart-b-definitions/800252-us-business https://casetext.com/regulation/code-of-federal-regulations/...
- mcherm 6y ago
  You say that > The regulations make it clear that the President alone determines 'whether a transaction threatens national security.' HOWEVER, I maintain that this authority can only be exercised under certain restrictions. For instance, if the President were to declare that all social media companies that "fact check" his statements threatened national security that would be a violation of the first amendment (free speech). As such, the courts would be responsible for overturning his declaration. Similarly, if the President were to just declare ByteDance to be a threat to national security without even having a reason for doing so, I maintain it would violate the requirement to engage in due process. He doesn't need to have a GOOD reason, but it can't be "because I feel like it" or "because they said mean things about me". I'm not clear on whether the right to due process is inapplicable because ByteDance voluntarily chose not to undergo the review.

by mcherm 6y ago

mmmmmbop 6y ago

You are spot-on about the constitution guaranteeing that laws must not be passed just to punish a certain company. What I believe you are missing, however, is that there is existing law that the divesting order is based on. Any acquisition involving foreign commerce is subject to the approval of the CFIUS (Committee on Foreign Investment in the United States). Following is an explanation taken from a recent Congressional Research Service report [1] (page 5). "These regulations created an essentially voluntary system of notification by the parties to an acquisition [...]. Despite the voluntary nature of the notification, firms largely comply with the provision, because the regulations stipulate that foreign acquisitions that are governed by the Exon-Florio review process that do not notify the committee remain subject indefinitely to divestment or other appropriate actions by the President. The regulations make it clear that the President alone determines 'whether a transaction threatens national security.'" When ByteDance acquired TikTok, they chose not to undergo that review. This was their legal right. However, that made their acquisition liable to be retroactively disallowed by the President. [1] https://fas.org/sgp/crs/natsec/RL33312.pdf https://fas.org/sgp/crs/natsec/RL33312.pdf

SergeAx 6y ago
I am quite inexperienced in US law, but are you just told that acquisition of one foreign company by another foreign company should be reviewed by some random US committee?!
- mmmmmbop 6y ago
  Of course the U.S. has no authority over any two foreign companies that do no business within the country. However, if one of the two companies engages in interstate commerce in the U.S. -- which TikTok does -- it is considered to be a U.S. business [1] for the purposes of the CFIUS review. [1] https://casetext.com/regulation/code-of-federal-regulations/title-31-money-and-finance-treasury/subtitle-b-regulations-relating-to-money-and-finance-continued/chapter-viii-office-of-investment-security-department-of-the-treasury/part-800-regulations-pertaining-to-certain-investments-in-the-united-states-by-foreign-persons/subpart-b-definitions/800252-us-business https://casetext.com/regulation/code-of-federal-regulations/...
mcherm 6y ago
You say that > The regulations make it clear that the President alone determines 'whether a transaction threatens national security.' HOWEVER, I maintain that this authority can only be exercised under certain restrictions. For instance, if the President were to declare that all social media companies that "fact check" his statements threatened national security that would be a violation of the first amendment (free speech). As such, the courts would be responsible for overturning his declaration. Similarly, if the President were to just declare ByteDance to be a threat to national security without even having a reason for doing so, I maintain it would violate the requirement to engage in due process. He doesn't need to have a GOOD reason, but it can't be "because I feel like it" or "because they said mean things about me". I'm not clear on whether the right to due process is inapplicable because ByteDance voluntarily chose not to undergo the review.