Trump meetings with CEOs raise fear he intends to usurp DOJ, FTC authority in merger reviews
19 January 2017. By Curtis Eichelberger.
President-elect Donald Trump has presented himself as the ultimate dealmaker, and his recent meetings with companies involved in mergers have raised the fear that this is exactly how he intends to run the federal government.
The US Department of Justice and the Federal Trade Commission are responsible for vetting deals for antitrust concerns. Politicians, attorneys and other observers are concerned that the president-elect has offered another avenue to secure approval.
Trump discussed the $62 billion merger of agricultural behemoths Bayer and Monsanto last week with the companies' chief executives, reportedly soliciting assurances about jobs and investment. He also met with the chief executive of AT&T, whose proposed merger with Time Warner — like the Bayer-Monsanto deal — is being scrutinized by the DOJ.*
Bayer and Monsanto issued a joint statement after the meeting:
"The combined company expects to spend approximately $16 billion for R&D in agriculture over the next six years with at least half of this investment made in the United States. This is an investment in innovation and people that will create several thousand new high-tech, well-paying jobs after integration is complete, jobs that will keep America at the forefront of agricultural innovation and that serve U.S. farmers by delivering better products and services faster."
Sean Spicer, the incoming White House press secretary, gave Trump the credit for securing the commitment during a call Tuesday morning.
"The reason for this commitment and expansion is because of the president-elect's focus on creating [a] better business climate here in the United States, which has already increased consumer and small business confidence since the election," Spicer said.
Trump's talks with the companies, however, garnered a swift rebuke from Senate Democrats and the American Antitrust Institute.
US Senator Amy Klobuchar, the ranking member of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, asked Senator Jeff Sessions, nominee for US Attorney General, to ensure the integrity and independence of the DOJ's antitrust division.
In a letter to Sessions, she noted that the White House has traditionally left antitrust enforcement decisions to the DOJ and FTC.
"Even the appearance of inappropriate interference could irrevocably undermine the legitimacy of antitrust enforcement," Klobuchar said in her letter. "The President-elect's high-level meetings last week underscore the importance of your commitment to ensuring the integrity and independence of the Department of Justice's Antitrust Division, and I am asking the following questions to further explore your position on antitrust enforcement. Would you please elaborate on your statement 'there will not be political influence in the [antitrust enforcement] process?' "
Diana Moss, president of the American Antitrust Institute, echoed Klobuchar's concerns.
"Attempts by the incoming administration to broker merger deals or directly negotiate merger concessions signal a fundamental disregard for the law and for due process," Moss said in a statement. "Antitrust enforcers play the important role of referee in protecting competition and our market system. … The end-runs that we are seeing in key mergers such as Monsanto-Bayer not only abuse the process, they imperil our markets, our economy, and our society."
The incoming president is breaking long-held traditions by meeting with companies under merger review.
"Generally, the White House holds itself at a distance from any merger that's going to be under investigation," said Bert Foer, former president of the American Antitrust Institute in Washington, DC. "What's troubling is the potential for quid pro quo," where the president promises a merger will be approved if the company promises, say, to create a certain number of jobs or other benefits.
Attorneys say that if jobs and capital investment, which aren't considerations in current antitrust review, are weighed as factors, that would undermine decades of development in antitrust merger law and introduce non-competition elements to mergers that could harm merger reviews.
"Does the president or anyone have the right to waive the law in return for some other benefit? That's the question," said Foer.
Lawyers are generally concerned about Trump's involvement with merging companies, and seem to fall into two camps.
The first camp says presidents have always discussed big mergers with company CEOs. Companies frequently petition Congress and the White House, but generally the White House counsel's office screens any requests about pending cases to avoid the appearance that the Administration is intervening in law enforcement matters. Trump's in-your-face style, his Twitter comments and his insistence on taking credit for promises from companies are only a superficial change. These attorneys say that in the end, the agencies and judiciary will be left to uphold the antitrust laws as they always have.
The other camp fears that antitrust reviewers will be more reluctant to challenge deals, and Trump will use the power of the presidency to influence high-profile mergers and acquisitions.
If Trump has the willingness and authority to sway antitrust reviews, it will be malpractice not to try and arrange a meeting between Trump and company CEOs, one attorney at a high-profile Washington firm told MLex.
The last time a future US president was so vocal about a pending antitrust decision was in 2000 when then-Texas Governor George W. Bush was running for the White House.
The Department of Justice had sued Microsoft three years earlier, alleging the company was forcing personal computer manufacturers that sold Windows 95 to also install the Microsoft Windows Explorer web browser.
Bush, speaking at a news conference near Microsoft's corporate headquarters days before the Washington primary in March 2000, said, "If you're looking for the kind of president I will be, I'll be slow to litigate." Standing next to representatives of high-tech companies including Microsoft, Bush said his antitrust test would be "are the entities innovative, are jobs being created, the economy better off?"
Bush won the election and Microsoft settled the case in November 2001 with what amounted to a slap on the wrist.
Another, more disturbing case of presidential involvement came in the 1970s when then-President Richard Nixon influenced the outcome of an investigation into International Telephone and Telegraph's acquisition of three companies.
Nixon wanted ITT campaign donations in exchange for antitrust approval. The matter later became part of the Watergate investigation.
Richard Reeves, author of "President Nixon: Alone in the White House," quotes Nixon telling Bob Haldeman and John Ehrlichman that Deputy Attorney General Richard Kleindienst " … cut a deal with ITT."
Nixon later ordered that Richard McLaren, who headed the Justice Department's antitrust division, be given orders to back off ITT.
"I want something clearly understood, and, if it's not understood, McLaren's ass is to be out of there within one hour. The ITT thing — stay the hell out of it. Is that clear? That's an order. … I do not want McLaren to run around prosecuting people, raising hell about conglomerates, stirring things up."
Herbert Hovencamp, a law professor and antitrust expert at the University of Iowa, said everyone needs to take a deep breath. There is a difference between President-elect Trump and President Trump.
"At this stage he is, of course, not yet the president," Hovencamp said. "However, later on it would be improper for him to make any promises on merger review in exchange for bringing back jobs. This is why we have independent agencies."
At least, that's how it was done in the past.
*Corrected on Jan. 19, 2017, at 23:45 GMT: The original version of this article said that the CEOs for both AT&T and Time Warner met with Trump.