WASHINGTON, D.C. — Federal regulators are likely to be less aggressive in their M&A enforcement over the next four years — except for those companies that attract the disfavor of incoming president Donald Trump, say antitrust attorneys who practiced during the first Trump administration.
“It will be a relaxing of merger enforcement standards, not an abandonment of merger enforcement,” Seth Bloom, a lobbyist and president of Bloom Strategic Counsel, told TheWrap. Trump “is a populist, and particularly when it comes to Big Tech, he’s willing to engage in antitrust enforcement.”
That doesn’t mean antitrust scrutiny of deals will go away or that the administration will take a laissez-faire approach. “But the extreme, aggressive, anti-merger enforcement policy of the Biden administration, both at the Department of Justice and Federal Trade Commission, will no longer be in place,” Bloom said.
Veteran legal experts, however, expect to see exceptions for deals that involve Trump’s enemies and serve his political needs. Chris Sagers, a law professor at Cleveland State University, predicted there will be “seemingly chaotic, seemingly ideologically influenced or politically influenced attacks” under the new administration.
“Those will be either in very high-profile cases, like AT&T-Time Warner — but also they could be cases that play very well with most conservatives, such as antitrust attacks on Big Tech for censoring speech,” he said.
After last week’s decisive election victory by Trump, some entertainment executives made it clear that they were itching to have the flexibility to do more merger deals. Hollywood is struggling, especially its fading cable television model, and CEOs are hopeful they can find combinations that could help them financially engineer stronger results. Comcast said it would explore a spinoff of its cable TV networks, and Warner Bros. Discovery CEO David Zaslav said the industry broadly needed more consolidation.
“We have an upcoming new administration, and it’s too early to tell, but it may offer a pace of change and an opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that’s needed,” Zaslav said last Thursday.
But investors have been down this road with Trump before.
Attorneys expect Trump to exert political influence
Investors were hopeful when Trump was first elected in 2016 even though he had espoused anti-big business populism during his campaign. While they were unsure what the new president would actually do, they were not convinced he had any real interest in antitrust, one antitrust attorney told TheWrap.
“I feel like this is a movie sequel, and it’s not going to be any different,” the attorney said.
If the president-elect’s next term is anything like his last, he is likely to exert political influence over high-profile deals he does not like and may even enact a degree of quid pro quo from executives over others, the attorney said.
Shortly before taking office in 2017, Trump had a meeting with chemical and seeds giants Bayer and Monsanto, whose $66 billion merger in a highly consolidated market was pending before the Antitrust Division. At the time, it was reported that Trump was looking to extract certain commitments from the firms in exchange for antitrust favor, the attorney said.
And after Trump took office, the DOJ Antitrust Division failed in its attempt to block AT&T’s $85 billion acquisition of Time Warner, the then-parent company of CNN — a network that Trump frequently criticized.
While not illegal for a president to discuss an individual merger, Richard Painter, chief ethics lawyer in the George W. Bush administration, told Politico at the time: “It can start to look like the president is playing favorites and can send all sorts of mixed signals to the business community.”
Other attorneys pointed to two blockbuster antitrust suits filed against Big Tech firms under the Trump administration in late 2020. That’s when the DOJ sued Google for operating an illegal online search monopoly — a case that the tech giant lost earlier this year but plans to appeal. On Nov. 6, the Wednesday after Election Day, Reuters reported that Trump may shift course on antitrust and is skeptical about a potential break up of Google, which is one of the remedies in the case that the DOJ may ask a judge to force.
Two months after the Google suit was filed, the FTC sued Facebook for anticompetitive conduct in maintaining an illegal personal social networking monopoly and sought, among other things, sell-offs of both Instagram and WhatsApp.
“Mergers are more likely to be approved under Trump’s next term,” the first attorney said, “but companies that offend the president or go counter to other non-antitrust-related political objectives of the administration may be the victims of unpredictable political targeting.”
Among examples of that situation, the attorney referred to a case brought in 2020 by a DOJ whistleblower who charged then-Attorney General William Barr with using the agency’s Antitrust Division to go after the cannabis industry because Barr personally disliked the industry.
“Trump is not your father’s Republican. He’s not a return to George W. Bush,” Bloom said. Trump is also not like Biden, FTC chair Lina Khan or DOJ Antitrust Division head Jonathan Kanter, Bloom said.
“If you think the Biden administration is a 10 on a scale of one to 10 in antitrust enforcement with 10 being the strongest, and if you think the George W. Bush administration was a two or three, I would say the Trump administration will probably be about a six,” Bloom said.
“Hands-off,” minimalist enforcement
John Ingrassia, partner at Proskauer, agreed. “It’s not going to be hands-off,” minimalist enforcement, he said. Big Tech mergers will continue to be under scrutiny, just as they have been “all the way back to Obama when his administration put a task force together on tech and started looking at these types of deals. Then Trump started bringing these cases, and Biden continued them,” he said.
Sagers of Cleveland State University said he sees a two-part scenario to merger enforcement under Trump. On one hand, he expects most of the cases “that are not publicly visible and that would never be covered on Fox News or other popular outlets, those will be handled as any Republican administration would.”
That is, once new FTC and Antitrust Division heads are in place, they are likely to take a far less aggressive approach to antitrust enforcement than their predecessors Khan and Kanter, challenging far fewer mergers.
The new leadership “will just happen to be very conservative and will run the antitrust agencies the way that Republicans usually do, which is very permissively,” Sagers said.
Anything can get through. And the only caveat is if [Trump] senses that the deal would advance the interests of a political enemy. — Hal Singer, managing director at litigation consultancy EconOne
On the other hand, Sagers said he expects to see incidents of politically motivated attacks that would prevent mergers from going through.
High-profile deals are more likely to face political headwinds than others. “It’s the handful of cases that will get all the news,” Ingrassia said, but it’s unlikely that the middle-market mergers will be of concern.
Meanwhile, Hal Singer, an economist and managing director at litigation consultancy EconOne, does not see aggressive antitrust enforcement in Trump’s next term. “Anything can get through,” Singer said. “And the only caveat is if [Trump] senses that the deal would advance the interests of a political enemy,” like his beef with CNN.
That, however, is only a remote possibility, he said.
The AT&T-Time Warner deal — with CNN attached — was a “unicorn” that many people have tried to paint as part of a pattern, Singer said. If the merger had been in the grocery or some other industry, Trump wouldn’t have cared, he said.
Based on Trump’s campaign rhetoric this time around, the president-elect seems to have made a shift toward deregulation, Singer said.
The president-elect’s interview at The Economic Club of Chicago last month may be one sign of that. When the topic of potentially breaking up Google arose, Trump expressed skepticism. “What you can do without breaking it up is make sure it’s more fair,” he said.
His comments appear to be an about-face from September when he threatened to sue Google once again if re-elected for posting only “bad stories” about him and only “good” ones about his presidential opponent Vice President Kamala Harris.
If Trump follows through on taking a less-aggressive approach to antitrust enforcement, it would mean “a return to where we were prior to the Biden administration, where firms pretty much were getting away with whatever they wanted,” Singer said. Trump wants a pro-business environment, he added, even if it means allowing monopolies in various industries.
