Source: AFP
President Joe Biden’s skeptical approach to corporate mergers has been a hallmark of his administration’s business policy — an attitude generally expected to ease if Donald Trump returns to the White House.
Biden appointees such as Lina Kahn, chairman of the Federal Trade Commission, and Assistant Attorney General Jonathan Kander have broadened the scope of government antitrust oversight to consider issues such as a deal’s impact on workers and potential market entrants.
Dealmakers have complained about added costs from this heightened scrutiny, while Khan and Kanter insist they have prevented troubled deals.
But with the clock ticking on Biden’s term, antitrust and dealmakers are beginning to think about what’s next as voters weigh the candidacies of Vice President Kamala Harris and former President Donald Trump.
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While a Trump victory is generally expected to lead to less antitrust enforcement and more trade than a Harris victory, even that outcome is far from certain, as the current Republican coalition includes not only corporate interests, but figures like the candidate Trump’s companion, Sen. JD Vance, who praised Hani.
“There’s a lot of uncertainty there,” said New York University professor Harry Furst. He said the populist bent of some members of Trump’s coalition “makes it difficult to predict what will happen.”
A Trump election victory would be “slightly positive to very positive” for dealmaking, predicted a Wall Street banker, who spoke on condition of anonymity. He cautioned that optimism for a potential turnaround under Trump should be tempered by concerns about a renewed US-China trade war.
“Consumer Competitors”
Biden struck an adversarial tone on deal-making early in his presidency, saying too many big companies were “eating up their competitors.” An executive order he signed in July 2021 promoted competition and included tougher antitrust enforcement.
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Biden pitched the approach as a necessary pivot from a failed 40-year “experiment to let giant corporations amass more and more power.”
Khan’s appointment sent a clear message to the business world, including tech giants.
Source: AFP
Khan rose to prominence after a 2017 academic paper on Amazon criticized antitrust enforcement for overlooking key priorities, such as a deal’s impact on workers and the ability of large companies — not yet monopolies — to discourage the emergence of new competitors .
Khan and Kanter have highlighted the importance of these issues, including the merger guidelines finalized in December 2023.
They have scored a few court victories, including the dismissal of Illumina’s acquisition of Grail in a case involving a cancer-detection test. and a ruling this month that Google’s search engine constituted a monopoly in a case originally brought by the Trump administration.
But the Biden administration also suffered some major setbacks, losing a challenge to Microsoft’s acquisition of Activision Blizzard and UnitedHealth Group’s acquisition of Change Healthcare.
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Weighting of risks
Former FTC enforcement officer Ryan Quillian pointed to data that the current commission has actually filed fewer lawsuits than its predecessors. He argued in an October 2023 document that the “rhetoric of the Biden administration is outpacing” the enforcement numbers.
Quillian, now a partner at Covington & Burling, said the firms focused on the “rhetoric and process of deterring” merger activity.
CEOs considering deals are now weighing the possibility of antitrust enforcement “at the very beginning of a deal,” the Wall Street banker said, adding that “there’s no question that clients are thinking twice or thrice about deals down the line.” .
The American Investment Council, a trade group for the private equity industry, has sharply criticized the Biden administration’s proposal to significantly increase pre-merger disclosures.
The proposed changes to the Hart-Scott-Rodino Act would include details about the rationale for a transaction, projected revenue streams and partnerships.
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The proposed rule “will make it much more expensive to complete such agreements,” slowing the U.S. economy “to the detriment of the very consumers whom antitrust is intended to benefit,” the council said in September 2023 comments.
These changes have not yet been finalized. The next administration will have to decide whether to maintain that policy, along with the 2023 merger guidelines, which will need to be adopted by US courts to have teeth.
Other questions involve pending lawsuits against tech giants Apple, Amazon, Google and Facebook parent Meta and whether they will proceed to litigation or take another path, such as a settlement or dismissal.
Source: AFP
