5 days ago
M&A Enforcement Easing Under The Trump Administration
(Original Caption) New York: Thomas Nast antitrust cartoon, 1888. "Sir James G. Blaine".
Trump antitrust officials are easing up on mergers and acquisitions (M&A) enforcement, ditching a Biden administration policy of discouraging mergers. This change in direction could promote enhanced American innovation and economic growth.
M&A Economic Benefits
M&A activity generates a variety of major economic benefits:
M&A Economic Costs
M&A may, however, impose economic costs when it reduces competition in the marketplace. The Clayton Antitrust Act bars M&A transactions that may substantially lessen competition.
Prior to the Biden Administration, a longstanding bipartisan enforcement consensus recognized M&A's general benefits. Federal antitrust guidelines from the Federal Trade Commission (FTC) and the Department of Justice (DOJ) stressed that those agencies would target only those M&A transactions that were likely to harm competition. Whenever possible, the agencies also worked with merging parties to 'cure' the potentially anticompetitive parts of a generally beneficial deal through structural (spinning off business assets) or behavioral (precluding future anticompetitive actions) remedies. The agencies did, of course, oppose unsalvageable anticompetitive deals.
Biden Anti-Merger Policies
DOJ and FTC leadership dramatically shifted gears and promoted an anti-merger policy:
Pre-Biden Merger Policy Restored
New FTC and DOJ Trump Administration leaders have public publicly committed to rolling back the Biden anti-merger agenda.
DOJ Antitrust Division Deputy Assistant Attorney General William Rinner committed to restoring merger enforcement 'transparency and procedural fairness' in a June 4 speech. Rinner stated that DOJ rejected the Biden 'total deterrence' approach to mergers, that it would restore 'fairness and predictability' to merger reviews, and that it would be open to crafting settlements that allowed mergers to proceed whenever feasible.
In a similar vein, new FTC Chairman Andrew Ferguson pledged that the FTC would 'stop [former FTC Chair]
Lina Khan's war on mergers,' and restore fairness and speed to merger reviews, thereby enabling 'the economy . . . [can] thrive, businesses can bring their new ideas to market, and we can grow our way out of this debt crisis.' The FTC, like the DOJ, seeks to pursue settlements whenever it can.
There already are indications that the new Trump FTC and DOJ are clearing mergers more quickly than was done under the Biden Administration.
Specific Matters
A rash of recent DOJ and FTC decisions on proposed mergers are in line with new agency leaders' recent bold pronouncements. It is doubtful that these mergers would have passed muster under the Biden Administration.
Perhaps the most significant recent development is DOJ's June 28 decision to greenlight HPE's acquisition of Juniper Networks, subject to narrowly tailored structural and behavioral remedies. This merger brings together the second (HPE) and third (Juniper) largest wireless local network providers of wireless local area network (WLAN) in the United States (Cisco is number one). DOJ originally had opposed the merger, and a trial had been scheduled for this July. As I explained last month in Forbes, this tie-up promises substantial efficiency gains that could accrue to consumers and the broader U.S. economy. It also should create a second major U.S. WLAN competitor on the global stage, bolstering the U.S.'s strategic advantage in critical digital infrastructure.
Other major deals have settled in recent weeks, creating potential procompetitive synergies benefiting the American economy:
Another merger has been fully cleared by the FTC after a very quick review:
Looking Forward
Trump II merger enforcement is off to a very good start. Initial official pronouncements and a rash of merger approvals (some with 'fixes') are helpful. They signal to markets that an economically sound and expeditious merger review process, which respects due process, has been restored.
Nevertheless, work still remains to be done. The Administration may wish to consider further steps to encourage welfare-enhancing mergers.
Specifically, for example:
Clarifications of merger policy that increase business regulatory certainty and incentivize dynamically efficient M&A transactions could bolster U.S. competitiveness in international markets, benefiting both American producers and consumers.
