January 9, 2018
Since President Trump took office, companies and boards have been closely watching developments in Washington, D.C. for signals about regulatory and enforcement policies under the new administration. In the antitrust world, after the active era of merger enforcement under President Obama, any shifts in enforcement could have significant consequences for corporations, particularly those with high market shares or those considering M&A transactions. As in other areas, key personnel decisions provide clues about the likely antitrust landscape under President Trump.
Most of President Trump’s appointments to lead the two federal antitrust agencies, the U.S. Department of Justice (DOJ) Antitrust Division and Federal Trade Commission (FTC), were delayed until well into 2017, but his antitrust team has now taken shape, though several Senate confirmations remain pending.Overall, we expect a modest, not radical, rightward shift in antitrust enforcement under the Trump administration. Most of President Trump’s appointees—including the heads of each antitrust agency, DOJ Assistant Attorney General for Antitrust Makan Delrahim (who has been confirmed by the Senate) and FTC Chairman nominee Joseph Simons (whose nomination is pending)—are mainstream antitrust enforcers who are unlikely to dramatically change the antitrust enforcement landscape. Both Delrahim and Simons, as well as several other of President Trump’s selections, had leadership roles in the antitrust agencies during the George W. Bush administration, when the antitrust agencies remained reasonably active, including in challenging mergers.
Beyond the mainstream nominees, several factors will limit any shift toward more lax antitrust enforcement:
- Career staff at the DOJ and FTC control the flow of investigations and how cases are presented to the agency’s political appointees and have become highly skilled at challenging deals.
- Being “pro-business” does not always mean being anti-enforcement—major corporations are often antitrust complainants, as well as merging parties.
- Enforcement by private plaintiffs, state attorneys general and international antitrust authorities will continue and may increase to compensate for any decrease in federal antitrust enforcement.
We expect relatively significant reductions in enforcement in monopolization cases, where enforcement was relatively lax under the Bush administration. On the other hand, criminal enforcement against hard-core antitrust violations (such as price fixing) has been an area of strong bipartisan consensus and is likely to remain aggressive. The change in horizontal merger enforcement will likely fall in between, with a noticeable, but not radical, decrease from the Obama administration.
Vertical mergers are another area where the Bush administration’s enforcement was relatively lax, but recent events make clear that vertical merger enforcement is not dead. On November 20, 2017, the DOJ sued to block AT&T’s acquisition of Time Warner, a vertical deal the DOJ alleges “would result in fewer innovative offerings and higher bills for American families.” In a DOJ press release, Delrahim explained, “AT&T/DirecTV’s combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction.”
The decision to challenge AT&T/Time Warner is consistent with a broader policy statement from Delrahim expressing deep skepticism regarding behavioral remedies. In a November 16, 2017 speech, Delrahim explained that, “like any regulatory scheme, behavioral remedies require centralized decisions instead of a free market process” and “set static rules devoid of the dynamic realities of the market.”
“Like most regulation,” Delrahim said, behavioral remedies “can be overly intrusive and unduly burdensome for both businesses and government.”
Delrahim further emphasized that this skepticism of behavioral remedies “cuts both ways—if a merger is illegal, we should only accept a clean and complete solution, but if the merger is legal we should not impose behavioral conditions just because we can do so to expand our power and because the merging parties are willing to agree to get their merger through.” In short, we expect somewhat less vertical enforcement, but also expect less willingness to accept consent decrees in the few vertical cases that do pose competitive concerns.
While the future of U.S. antitrust policy in 2018 and beyond remains to be seen, President Trump’s mainstream leadership appointments and several institutional factors point in the direction of a modest, but not dramatic, rightward shift in antitrust enforcement under his administration.