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President-elect Donald Trump’s meetings this week with corporate executives involved in mega-mergers raise questions about how much independence federal regulators will have in enforcing antitrust laws, experts say.
AT&T Inc. Chief Executive Officer Randall Stephenson met with Trump Jan. 12 at the Trump Tower in New York along with the company’s senior executive vice president for external and legislative affairs. Afterwards, AT&T said its proposed $85.4 billion bid for Time Warner Inc. didn’t come up.
Earlier this week, the CEOs of Monsanto Co. and Bayer AG met with Trump over their own $66 billion merger.
Trump’s meetings with executives before he takes office creates “at least the veneer of interference from the White House in the DOJ evaluation of the deal,” antitrust lawyer Matthew Cantor told Bloomberg BNA. That’s “highly unusual and disconcerting,” he added.
Both deals are expected to receive tough regulatory scrutiny given their size and presence in concentrated industries. Trump came out against the AT&T-Time Warner tie-up shortly after it was announced in October, saying, “it’s too much concentration of power in the hands of too few.” He hasn’t commented publicly on the Bayer-Monsanto deal.
Executive agencies make their analyses on the rule of law and on analyzed facts rather than on political considerations, said Cantor, a partner in Constantine Cannon LLP’s New York office.
The Justice Department’s Antitrust Division, which is reviewing both deals, has deepened its probes by requesting more information from the companies about their merger plans, referred to as “second requests.”
“Certainly, if second requests have already been issued, it would be highly unusual for an incoming administration to cancel them before the companies had complied, for this would set off a rebellion among the professional staffs of the DOJ and FTC,” said retired antitrust lawyer and a former deputy assistant attorney general Ky Ewing. “I can imagine that the incoming chief at DOJ or the incoming chair of the FTC might take a harder look at any recommendations of prosecution if the new president were opposed to it.”
The AT&T-Time Warner deal in particular is one that wouldn’t typically face government challenge, especially by a Republican administration, because it doesn’t involve direct competitors and is considered a “vertical” rather than “horizontal” transaction, according to industry analysts.
Challenging the AT&T merger in court is a risk that DOJ might not be willing to take, Cantor said. It would be an uphill battle to persuade a court to block the deal, especially given a long history of similar deals being cleared with conditions, if necessary, to preserve competition. In this case, Cantor wasn’t aware of any concerns DOJ has with the deal that the parties couldn’t address through a a settlement.
In 2011, the Obama administration allowed a similar deal between Comcast Corp. and NBCUniversal to go through, with conditions.
“At the end of the day, I think Trump will recognize that his administration needs to bring antitrust cases they can win,” Hal Singer, a principal at Economists Incorporated, a Washington-based consulting firm, told Bloomberg BNA. “We’ve already seen him recoil from other fiery statements on the campaign stump.”
During his campaign, Trump said he would block the AT&T-Time Warner deal because it would place “too much concentration of power in the hands of too few.” He also framed his opposition as a larger fight against a media “power structure” that was opposed to his candidacy.
“They’re trying desperately to suppress my vote and the voice of the American people,” he said Oct. 22 during a speech in Gettysburg, Pa. Trump has been particularly critical of news coverage by CNN, which is owned by Time Warner.
Andrea Murino, an antitrust partner at Goodwin Procter, said it’s too early to judge how Trump will approach antitrust based on this week’s meetings with executives. Who he appoints to lead the antitrust division and FTC, individuals who are more intimately involved in making enforcement decisions, will better indicate where he stands on the issues, she said.
“I don’t know that this one meeting suddenly suggests that Trump is going to be intimately involved in every transaction,” Murino said. “I think we need a sample size that’s simply bigger.”
Beyond rare exceptions, such as an antitrust controversy involving former President Richard Nixon, there is very little precedent for the White House to interfere with matters before the Justice Department’s Antitrust Division, according to Donald Klawiter, a partner at Sheppard Mullin Richter & Hampton LLP.
“The Division has traditionally made its decisions independently and taken great pride in being outside the political spectrum,” said Klawiter, a former Justice Department official. “But the president-elect is someone who has been vocal on these issues. How this will affect the agencies will be something to watch.”
Even if Trump wants to follow through on his campaign vow, he won’t necessarily have the power to do so, analysts said.
“A president can’t stop a merger,” Singer said. “You have to get an attorney general at the Justice Department to file a lawsuit and then you have to convince a judge that, according to antitrust law, this deal should be stopped. You can never walk into a courtroom and say you’re there because you’re mad at a CNN producer.”
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