Pulling no punches, Delrahim faces critics, talks up job he loves

16 Dec 2019 12:00 am by Kirk Victor

In a wide-ranging, hour-long telephone interview from Paris where he was attending the OECD Global Forum on Competition, Makan Delrahim pulled no punches.

The Justice Department’s antitrust chief responded to critics who say his sharp elbows have put off people in state attorneys general offices, at the Federal Trade Commission, and perhaps contributed to declining morale in his division.

“When you get into public service, you are not always doing these things to be loved,” he said. “You are doing these to improve the process in the best way possible, and I think it is true that I have probably had more initiatives, improvements — I guess that is in the eye of the beholder — than probably other AAGs.”

Delrahim was confirmed to the assistant attorney general post in September 2017 after serving as deputy assistant to the president and deputy White House counsel in the Trump administration. This is his second tour of duty in the antitrust division, having previously been a deputy assistant attorney general from 2003 until 2005. His government experience also includes serving as antitrust counsel and later as staff director and chief counsel of the Senate Judiciary Committee. Delrahim was a partner at Brownstein Hyatt Farber Schreck after leaving his government job in 2005.

Edited excerpts of the Dec. 5 interview follow.

FTCWatch: What can you say about battles with state attorneys general? Their unhappiness goes back to the DOJ’s handling of its challenge to the AT&T-Time Warner merger. They’ve even hired their own economists and are independently handling data collection — steps that have enabled some states to pursue litigation against the Sprint-T-Mobile merger even after the DOJ cleared it.

Delrahim: We cleared it with conditions. I would always look at the motivation of somebody who might be criticizing me first, as always with any source, especially if they don’t want to be identified. Frankly, no state AG wanted to support the [AT&T-Time Warner] transaction. State AGs are elected officials — they are political bodies. They are not disinterested as federal prosecutors are and should remain.

[With] Sprint-T-Mobile, five states have now defected and settled. That wasn’t because they apparently disagreed with my settlement. It was they maybe held out and got other [concessions] that were specific to their states’ interests. New York and California [were] in my front office meetings with the parties. They shared information. We had to give five days or seven days’ notice before each of us took an action. At the end, I don’t know what the reason was, [but] they violated the agreement. As soon as they learned that we were getting to a place where we might have a path to settlement that addressed our antitrust concerns, they violated that agreement and brought a lawsuit to get the jump on the press [coverage].

FTCWatch: In the bottom of the ninth inning, you sought to disqualify Glenn Pomerantz, the states’ lead trial counsel.

Delrahim: Not in the bottom of the ninth. Yes, I did. That’s because he was a government employee in possession of government information from third parties, which included Sprint and T-Mobile. Glenn was a government employee when the government sued to block the AT&T-T-Mobile merger [in 2011]. Glenn, I think the world of, and consider him a friend. I let him know ahead of time, and said I am not making the decision. The career office, what’s called [the Professional Responsibility Advisory Office] at the Justice Department — we’re going to seek their advice because this was brought to me. I wasn’t going to do this if the PRAO office said this wasn’t a problem. They told me it was a problem. I had a duty to protect the public.

Frankly, if Glenn was in my position, he would do the same thing. I am not trying to disrupt their case. I am protecting third parties next time who expect their information to be confidential to come and cooperate with us. The magistrate said it was too late to intervene. We could have appealed that. Maybe in retrospect I would have notified the court and said, ‘hey, we are waiting for this PRAO decision,’ but I didn’t want to make it public because I didn’t want it to be an issue. This was no deliberate delay. He’s the lawyer for one of the parties, the California AG. This wouldn’t have disrupted the case. Glenn is capable, but he is not the only one capable on that team.

FTCWatch: Overall, there’s not a lot of affection with the states.

Delrahim: That’s [not true]. We are working with them: Sabre-Farelogix, Bayer-Monsanto, Quad/Graphics-LSC, but every [transaction] is situational. We work closely with them. We had an incident where they started leaking information. It has happened twice. We had to modify our confidentiality agreement specifically because of leaks to the press.

FTCWatch: You were criticized for intervening in a no-poach case brought by the Washington state AG.

Delrahim: They don’t understand the difference between a vertical restraint and a horizontal restraint. When it’s a vertical restraint, I explained why [at a House antitrust subcommittee hearing] the worker was going to be harmed. It is not always illegal. It is fact-based. I don’t make policies based on some plaintiff lawyers’ interests. I look at how it affects the consumer and the worker. I am saying it could be illegal. If you outlaw that, you are going to hurt workers.

I play second fiddle to no one on that issue. I took the unprecedented move of intervening in the Duke-North Carolina case and saying first that it was a per se [violation] and it does not deserve state action immunity. [Duke paid $54.5 million to settle charges of illegally agreeing with the University of North Carolina not to poach each other’s medical faculty.]

FTCWatch: Even low-key Joe Simons wrote a letter to the Justice Department to complain about how the division has broken the agreement over jurisdiction in the high-tech area.

Delrahim: Let me correct you. He wrote a letter and the deputy attorney general wrote him a letter. We don’t make our letters public. Second, there are factual errors. There was an agreement made between the FTC and DOJ, July 12th, that [the FTC] no longer found convenient. There was a change in position. There seemed to be a misunderstanding. This issue between the two agencies has been going on for years. I didn’t create the clearance problem.

FTCWatch: Put it in larger context: folks are stunned that the Justice Department would charge its sister agency with pursuing a case — Qualcomm — that it alleges is contrary to national security and is bad antitrust law.

Delrahim: It’s not the first time the two agencies have differed. There was the Schering-Plough case. [In 2006, the Justice Department opposed certiorari in a case in which the FTC advocated for Supreme Court review.]

FTCWatch: You have to go back a long way to come up with examples.

Delrahim: Every single day there’s differences. And look, in the Qualcomm case — you have a sitting commissioner [Christine Wilson] who wrote an op-ed in The Wall Street Journal criticizing their own case. The only Republican commissioner who has voted on that case was Maureen Ohlhausen who wrote a very strong dissent. What does that tell you?

FTCWatch: Some charge the division is making decisions based on something other than antitrust considerations, like launching the investigation of auto companies [that struck a deal with California regulators on emission standards tougher than those favored by the Trump administration]. (See FTCWatch, No. 969, Sept. 30, 2019.)

Delrahim: Totally wrong. I don’t have a problem with them agreeing with California to do this. It could very well be legal if they qualify with the prongs of state action immunity. That is not clear. I did not speak to a single person outside of the Justice Department about this. I wasn’t told by the White House. I wasn’t asked or directed or even communicated with by the White House or the [Environmental Protection Agency] or the [Department of Transportation]. I said, ‘We have made no decisions. We have no information. Please give us information surrounding this agreement you made with your competitors.’ The Supreme Court repeatedly has said that it is illegal if competitors get together, no matter what the laudable goal is.

FTCWatch: One reason they saw politics is because critics saw politics in the challenge to the AT&T-Time Warner deal. Candidate Donald Trump said the merger would not happen on his watch.

Delrahim: But so did candidate Hillary Clinton. I didn’t have an interest in litigating this. I was forced to by them because [they took] none of the settlement offers [that I made].

FTCWatch: Some saw the NBCU-Comcast consent decree as a model for settlement.

Delrahim: How many people have criticized the NBCU decree? So, the NBCU decree was a behavioral decree which had 150 or so conditions. You tell me if all the concerns were addressed. NBCU was a $30 billion transaction. AT&T-Time Warner was a $108 billion transaction. Comcast covered about 32 percent of the country, which means if you raise prices, you can’t recoup from others. AT&T is nationwide and the largest pay-TV provider. They could [raise prices] to any cable operator or Dish. They could justify it and have the ability to [withstand] the diversion of the customers. Comcast was not in that same position. By the way, there were five different settlement offers that had nothing to do with CNN.

FTCWatch: Morale in the division is said to be quite low. There have been a lot of departures — some are cyclical. A survey put the division ranking at 375 out of 415, a precipitous drop from several years ago. Is morale as crummy as that report suggests?

Delrahim: That report was done in May of 2018. [Delrahim was confirmed on Sept. 27, 2017.] It looks back to the year before. Are there changes that made some people not happy? Perhaps. I’ve made some changes both in personnel and in policy to improve the division. For example, I created the new career position of senior director of investigations and litigation and appointed one of the career [section] chiefs, Kathy O’Neill. Why? Because I wanted somebody who had investigative experience to give us advice in the front office and who has been a chief. I was not getting that. When Kathy came in, it disrupted some people because they had a different channel. Were there some people in the division who were unhappy with what I did in the division? Sure. You tell me which federal agency runs on consensus.

In response to that [survey], one of the first things I did was I brought in all the chiefs. No other AAG has done this. Every week, my senior staff people, [including those outside DC by video conference], join in. Everybody knows everything that is going on.

FTCWatch: The appointment of antitrust litigator Ryan Shores as associate deputy AG to oversee review of online platforms reflects Attorney General William Barr’s interest in Big Tech. As an advocate of the unitary executive, Barr is not a fan of independent agencies. Some see him behind the tough stance of DOJ not to cede turf to the FTC.

Delrahim: We report through Deputy Attorney General [Jeffrey Rosen] to the attorney general. Second, this is an attorney general and a deputy attorney general who both understand antitrust law. And not just understand it — Bill Barr argued in the European Commission an antitrust case. How many US antitrust lawyers have done that? Jeff Rosen, the same. He represented AOL’s Netscape in the Microsoft case as well.

FTCWatch: Following up on my question, did Attorney General Barr drive this?

Delrahim: We have been dealing with the technology companies in the clearance process for the past two years. He very much is interested and supports it, as he said at his confirmation hearing. But the division’s involvement in these investigations pre-dated him as well.

FTCWatch: Yes, but did he tell you DOJ is not going to lose turf on big tech platforms?

Delrahim: No. He has been very supportive of everything we have done, which is fantastic if you are an enforcer.

FTCWatch: You have raised expectations on the high-tech front — yet no lawsuits have been filed.

Delrahim: I don’t think I’ve raised the expectations. We have an investigation. I can’t snap my fingers. I have been criticized because I haven’t brought a criminal no-poach matter yet. I have said publicly we have several grand juries in that field. You know what? Some people who criticize us aren’t even lawyers. In this country, there are constitutional restraints and to bring a criminal case, there is a procedure we must follow. It’s not like a state AG bringing these civil poach matters. They can bring those all day long.

FTCWatch: But you have talked about it — that’s why I said, “raised expectations.”

Delrahim: I talk about our priorities to bring these cases. But I don’t create violations. I enforce them.

FTCWatch: On your relationship with Mr. Barr, during the AT&T-Time Warner investigation, you had different recollections of a meeting. You submitted different statements. Some people thought this is going to be a rocky relationship.

Delrahim: Again, our relationship goes back 20 years. That was a litigation — perfectly reasonable on both sides. There are not too many people in the legal community who are more respected than Bill Barr. I’m honored to continue to serve here. But those people who may say certain things … every single day in Washington, rumors, it’s the oil of Washington.

FTCWatch: But in this case it was dueling statements — not like folks were basing their views on nothing.

Delrahim: Yeah, but I don’t think they appreciated the relationship and also the fact that we could have had two different views in an ongoing litigation matter.

FTCWatch: What do you see as your legacy?

Delrahim: I don’t know yet. I still have some time to serve.

FTCWatch: How long?

Delrahim: I don’t know. I serve at the pleasure of the president and the attorney general.

FTCWatch: True, but you can make your own decision as well.

Delrahim: I could. It’s always nice to have the opportunity to absolutely love what you do every single day. The job doesn’t feel like it’s a job. It’s a mission.

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