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The blockbuster Justice Department suit to stop AT&T Inc.'s proposed $85.4 billion tie-up with Time Warner Inc. came after a long wait in confirming a key antitrust official, delaying the megadeal but shedding little light on White House competition policy.
The people appointed by President Donald Trump to lead U.S. antitrust enforcement look like pro-business types who want the market to work out its own kinks. But that doesn’t necessarily reveal much about what they will do as enforcers, said Stuart Plunkett, an antitrust partner at Baker Botts LLP. “I think we’ll know a lot more over the coming year.”
The process of filling vacancies “is moving slowly, so the full impact is yet to be seen,” Mark Ostrau, chair of the antitrust and trade regulation group at Fenwick & West LLP, told Bloomberg Law.
One consequence is clear: AT&T and Time Warner had to move their deadline for closing their deal from April 22 to June 21 to accommodate the DOJ trial. But observers say that’s about all we know.
Makan Delrahim, head of the DOJ’s antitrust division, was confirmed by the Senate just a few months ago, and the Federal Trade Commission is still being led by an acting chief. The White House announced in October that Trump named antitrust lawyer Joseph Simons to become the next FTC chairman. Months later, the White House has yet to make a formal nomination.
The broader implications of the AT&T-Time Warner suit are unclear, said Seth Bloom, an antitrust attorney at Bloom Strategic Counsel LLC in Washington and former Democratic general counsel for the Senate Judiciary Committee’s antitrust subcommittee.
“I think it’s dangerous to generalize from one enforcement effort what the enforcement approach will be,” he told Bloomberg Law. “It certainly does show that they’re not going to be a passive antitrust enforcer and just wave everything through. But what exactly this portends is hard to say.”
What happens in court is also important. “If the court rules for the merging parties, I think that would be a real deterrent to the government bringing other actions, especially vertical merger cases,” Bloom said.
Former Republican FTC Commissioner Joshua Wright agreed. “The relevant question is whether it means we have a shift in merger policy or they just happened to view this particular merger as likely to raise competitive concerns,” he told Bloomberg Law. “I think it’s too early to answer that question.”
Adding to the uncertainty are questions about whether the White House has interfered in antitrust enforcement. Some advocates say Trump’s vocal opposition to the AT&T-Time Warner combination and his constant attacks on the Time Warner news channel CNN cast a cloud of suspicion over the DOJ’s suit.
There has been less market and media chatter about Walt Disney Co.’s proposed purchase of 21st Century Fox Inc. and CVS Corp.’s bid to acquire insurer Aetna Inc., which both will get reviewed by Trump’s antitrust officials.
In reality, though, Trump doesn’t have much impact on antitrust enforcement beyond his ability to nominate agency officials, according to Ostrau. The FTC and the DOJ have traditionally enjoyed a strong reputation for staying above politics and focusing on the facts and the law from one administration to the next, he said.
The FTC and DOJ differ from agencies like the Federal Communications Commission and Environmental Protection Agency, where it’s possible to see 180-degree changes under a new president, he said.
“At the antitrust agencies, it might be more like 30-degree changes” because they are guided by the law rather than shifting public policy agendas.
The AT&T-Time Warner challenge is unique in that it’s the government’s first effort in decades to stop a “vertical” merger involving companies that aren’t direct competitors. Vertical deals typically get approved by U.S. regulators.
Antitrust concerns in vertical mergers have often been resolved using “behavioral remedies,” promises by the companies not to unfairly exert dominance, for example. But Delrahim has repeatedly said he’s skeptical of such fixes because he views them as equivalent to regulations.
“Some people might look at the AT&T-Time Warner case as a signal from DOJ that they’d rather challenge transactions than bend over backwards to seek a fix,” Ostrau said. “But that’s not a change that’s totally unexpected. It’s a trend that preceded the current administration. Both agencies were already questioning whether consent decrees were really the right approach for problematic mergers, for example. And frankly, the agencies keep getting better at litigating. So, it’s become a real alternative for them.”
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