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President Donald Trump’s endorsement of Walt Disney Co.’s proposed purchase of 21st Century Fox Inc. ahead of any government antitrust review highlights a growing political problem for U.S. regulators, policy analysts told Bloomberg Law.
Trump, unlike most other recent presidents, hasn’t shied away from weighing in on high-profile mergers, a shift that troubles some competition advocates who fear antitrust law may be used as a political tool.
“Every time the president gets involved in one of these deals, it has the potential to raise questions,” Joshua Stager, policy counsel for the New America Foundation’s Open Technology Institute, told Bloomberg Law.
AT&T Inc.'s proposed $85.4 billion tie-up with Time Warner Inc. has drawn opposition from the president. That transaction involves Time Warner property CNN, which is frequently criticized by Trump because of its coverage. The Justice Department is suing to stop the merger, saying it would give AT&T too much control over must-have content like HBO’s Game of Thrones and CNN.
In November, House Judiciary Committee Democrats demanded a congressional hearing on the AT&T-Time Warner merger and any involvement from the president, but the request has so far been ignored by Republicans.
“Obviously the Justice Department has the responsibility to do these reviews independently of the White House,” Rep. David Cicilline (D-R.I.), ranking member of the committee’s antitrust panel, told Bloomberg Law in a November interview. “The idea that the White House would be attempting in any way to interfere with that process is obviously something that is very disturbing to me and other members of Congress.”
Antitrust practitioners are watching to see if Walt Disney Co.’s proposed merger with 21st Century Fox receives different treatment. 21st Century Fox is owned by media mogul and Trump ally Rupert Murdoch. White House press secretary Sarah Sanders said Dec. 15 that Trump had called Murdoch to congratulate him on his deal to sell the 21st Century Fox’s movie business to Disney.
Before he was inaugurated, Trump met with both Bayer CEO Werner Baumann and Monsanto CEO Hugh Grant to discuss their transaction. That didn’t escape the notice of Sens. Amy Klobuchar (D-Minn.) and Jeff Merkley (D-Ore.), who wrote Attorney General Jeff Sessions in July asking for “thorough and impartial analysis” of the deal. The Bayer-Monsanto deal is still pending at the DOJ as well as several other regulators around the world.
The president’s public views puts added pressure on the Justice Department to maintain an appearance of independence from the White House, especially after its decision to sue to stop AT&T-Time Warner.
Sen. Elizabeth Warren (D-Mass.), a strong opponent of the AT&T-Time Warner merger, has expressed mixed feelings about the DOJ’s suit, calling it a “positive step” while also raising concerns about Trump.
“The president’s attacks on our free press have cast a cloud of suspicion over the decision to block the merger,” she said Dec. 6 at an event hosted by the Open Markets Institute. “It’s essential that the courts and the public approach this case as they would any other — based on the law and the facts, and not on President Trump’s repeated efforts to punish his enemies.”
Concerns about maintaining the independence of the nation’s antitrust agencies came up earlier in the year, including in the Senate confirmation of the DOJ’s antitrust division chief, Makan Delrahim.
Delrahim then came under scrutiny almost immediately after his confirmation after news reports surfaced that the DOJ was preparing to challenge the AT&T-Time Warner deal ahead of the actual announcement.
Some of the initial reports characterized the decision as a political move aimed at punishing CNN. The DOJ’s complaint doesn’t address CNN’s coverage but simply refers to the news channel as part of Time Warner’s must-have content. But the stories about punishing CNN were circulating for at least a week before the DOJ officially announced the lawsuit.
AT&T, meanwhile, announced Dec. 20 that it will give more than 200,000 U.S. workers a special $1,000 bonus to celebrate the signing of the tax-cut bill. AT&T Chief Executive Officer Randall Stephenson’s effusive praise of a top Trump priority comes as the company is in a locked battle with the administration over its Time Warner bid.
Warren said she was concerned about Delrahim when he was a nominee and remains troubled by his background as a “loyal” Trump supporter and counsel. “President Trump has made it clear that he expects his agency heads to carry out his orders, and Delrahim is no exception,” she said.
Delrahim has repeatedly stated that he has had no contact with the White House about the merger.
Stager said he supports the DOJ’s challenge and doesn’t suspect any political motives. “There are definitely a lot of concerns with this deal, and they’re laid out in DOJ’s complaint,” he said.
None of that looks like it’s targeting CNN or has anything to do with some of the concerns that Trump has voiced on Twitter and other platforms. Still, statements by Trump either in support or opposition to mergers can be problematic for regulators, he said.
Phillip Berenbroick, a senior policy counsel for the consumer advocacy group Public Knowledge, called the president’s statements “unfortunate.”
“They’ve obscured what’s actually a strong and legitimate exercise of antitrust authority by DOJ to protect competition and consumers,” he told Bloomberg Law.
Some antitrust practitioners fear that even without White House interference, the DOJ is on the wrong track in trying to block AT&T and Time Warner. “It suggests not only a completely different approach to antitrust, but, in some ways, the opposite approach that the government has taken for the last 40 years,” Larry Downes, project director at the Georgetown Center for Business and Public Policy, told Bloomberg Law.
DOJ’s aggressive action in AT&T-Time Warner matter could have implications for other cases, Downes said. “If the theory described in the AT&T complaint is really the government’s new theory of antitrust, then they’ll have to block Disney-Fox, because it’s even worse, at least on their terms — not on normal antitrust terms,” he said.
For regulators, any involvement from the White House will likely show up in litigation. And the need to appear impartial becomes more difficult when outside observers are comparing the DOJ’s treatment of one merger with another one that may have different internal characteristics.
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