DOJ Antitrust Priorities Under Trump Unclear But Sessions Appointment Offers Clues

Echoed American Antitrust Institute President Diana Moss: "There is a lot of murk.”

The pick of an incoming DOJ nominee may offer some clues, and controversy. The Trump transition team on Friday announced he is nominating Sen. Jeff Sessions, R-Ala., for attorney general, calling him "one of President-elect Trump's trusted advisors on the campaign.”

Likely candidates to head up the DOJ Antitrust Division in a Trump administration include George Mason University Global Antitrust Institute Executive Director Joshua Wright and Delta Airlines Senior Vice President-Regulatory and International Christine Wilson, who until earlier this year was an antitrust lawyer at Kirkland & Ellis, said Barry Nigro, Fried Frank antitrust group practice chairman. Neither Wilson nor Wright, a former FTC commissioner who reportedly is heading the FTC transition (see 1611180019), commented.

A new division chief likely won't be confirmed until sometime in spring, antitrust lawyers told us -- especially because that person is often scrutinized by Congress, said antitrust lawyer Carl Hittinger of BakerHostetler.

Sessions

Bloom said the Sessions nomination supports the idea that the Trump administration will try to fill the top DOJ echelons with conservative figures. However Sessions hasn't shown big interest in antitrust matters, Bloom said: "I think he would be happy to delegate to the assistant attorney general" heading the Antitrust Division.

Sessions during his time on the Senate Judiciary Committee never served on the Antitrust Subcommittee and hasn't been active in antitrust legislation, but his questioning of Supreme Court Justice Sonia Sotomayor during her confirmation seemed to indicate a particular leaning toward strict impartiality, Hittinger said. "If he is true to that, he should look at antitrust cases as they come and his division should make decisions based on the law or economics without any view of political issues or personal issues," Hittinger said. "Investigations go where they go, the economics are what they are." Also having been one of three senators to complain to then-Attorney General Janet Reno about seeming Antitrust Division improprieties, Sessions is likely to pick a professional antitrust expert, Hittinger said. "He knows he will be called on the carpet" if the Antitrust Division does something improperly, he said. Whether Sessions as attorney general affects the chances of the DOJ approving AT&T/TW, Hittinger said, "He is going to look at any big merger on the facts, the law and the economics. He is a lawyer's lawyer in some ways --- 'Is this a case we can win? Is this a case that has the facts and economics to support it?’”

FCC Commissioner Ajit Pai, pointing to his time working for Sessions when the senator was chairman of the Senate Subcommittee on Administrative Oversight and the Courts, called him "a good man and a superb senator: honorable, thoughtful, devoted to the Constitution, and deeply committed to equal justice and the rule of law." DOJ "and the American people will benefit from his leadership," Pai wrote.

Sessions is "an alarming choice ... to serve as the chief law enforcer for the United States of America," given his "appalling" civil rights record, including opposition to Obama judicial nominations and to Voting Rights Act enforcement, said Congressional Black Caucus Chairman G.K. Butterfield, D-N.C., in a statement. “Having previously been denied a nomination by members of the U.S. Senate over concerns about his views of African Americans, Senator Jeff Sessions will very likely face an uphill battle in being confirmed.”

Consistent DOJ

For most antitrust matters, a Trump administration won't be fundamentally different from an Obama one, Nigro said. Most FTC votes are unanimous, he said. "That tells you there is a lot of consensus in the antitrust community when it comes to enforcement. The differences are on the margins." He said a chief difference between conservative and liberal enforcers in merger reviews is a concern about false positives or bringing unmerited enforcement actions, versus false negatives, by letting a deal go through that shouldn't. The move to a Republican-appointed Antitrust Division head will bring some changes, "but I don't expect them to be dramatic," he said: DOJ and FTC staff under Trump "is for the most part the same staff that is there today. All these cases are built on the work of the staff.”

However, past GOP administrations generally have brought fewer enforcement actions in vertical combinations and fewer monopolization cases, which could point to Trump administration directions, "if past is prologue," said Skadden Arps antitrust lawyer Tara Reinhart. She was chief trial counsel for the FTC Competition Bureau.

Trump's campaign included talk of preventing fraud and abuse and using federal power to ferret out abusive corporate conduct that causes excessive consumer pricing, which flows into antitrust enforcement, Hittinger said, adding that a Trump administration likely would look at using antitrust law as a way of fulfilling those policy objectives. Any administration has wide discretion as to what civil antitrust investigations to pursue. Trump also has made statements about foreign corporations affecting the U.S. economy and domestic businesses, which raises the question of whether his administration might apply extra scrutiny to mergers involving a foreign company buying a U.S. one, Hittinger said. While courts and agencies historically haven't factored into merger analyses any nationalist interest, he said, "There's a first for everything. That issue could come up.”

"Establishment conservatives" of the University of Chicago school of thought have dominated antitrust enforcement for the past 30 years, and that continuation under Trump would mean a continuing emphasis on "lots of deferences to efficiencies" and no change in systemic marketplace problems like slowed rates of market entry, Moss said. "We in fact have a competition problem." However, Trump's populist campaign also could signal a more populist approach to antitrust, she said. "If Trump wanted to be true to his base and deliver on his promises to his base, he would appoint people who are aggressive enforcers to continue to challenge anticompetitive mergers, to challenge anticompetitive conduct.”

AT&T/TW

Other than Trump's campaign comments against AT&T's proposed buy of Time Warner on the grounds of undue concentration of power, there are few indications of how he might view antitrust matters, antitrust experts told us. Given his seeming walk-back since elected on a variety of campaign issues, it's not clear if AT&T/TW will see the same, they told us. The AT&T/TW comments point to Trump's being comfortable with intervening, but any ability to act is predicated on the ability to get an order from a judge, Nigro said. "So any sort of agenda is going to need to be based on the law."

Trump himself and his companies have plenty of antitrust experience, though, as both defendants and plaintiffs, Hittinger said. And he has talked about antitrust in indirect ways, such as in his proposal to break apart the regional approach in the Affordable Care Act and take a national approach to make it more competitive, Hittinger said. "It is unique that a president-elect has personally had such substantial antitrust involvement," echoed Julian Perlman of Phillips Nizer, who has antitrust experience.

A lot of the people close to Trump are "traditional Republican types," which could mean people nominated for leading positions will "be more laissez faire, free market types," Bloom said. That could mean "a more relaxed atmosphere for antitrust than it was in the last few years of the Obama administration,” in which it moved against a number of transactions, he said. Wright, for example, has a very conservative, restrictive view of antitrust enforcement, Bloom said.

DOJ long has been reluctant to take action under Section 2 of the Sherman Act, covering single-firm conduct that threatens competition, and the George W. Bush administration issued a monopolization report that raised the bar for action, Bloom said. While the Obama administration rescinded that report, "it hasn't been very active on Section 2 cases either," he said, adding that the Trump administration could in turn re-enact the report.

The new administration likely will be more favorable to transaction approvals than the Democrats have been, Cowen and Co. analyst Paul Gallant emailed investors Friday. That doesn't mean easier going for AT&T/TW since "media consolidation seems to be a negative factor for President-elect Trump," the ex-FCC official wrote.