Even before the election, a big question for dealmakers has been whether Donald Trump would meddle in government merger reviews.
At a gathering of antitrust lawmakers Thursday, some of the field's leading experts cautioned that the Department of Justice and Federal Trade Commission officials who oversee merger reviews will need to tune out the president if a merger investigation becomes the subject of his now infamous Twitter rants.
Trump, still a few weeks away from his election, set potential merger parties on edge when he criticized AT&T's (T) - Get Report $85.4 billion plan to acquire Time Warner (TWX) . He made his remarks in a speech from the campaign trail when the deal was announced Saturday, Oct. 22.
"As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," Trump said. Left unsaid, but an easy implication to draw, was that Trump would deliver payback for what he has complained was blatant favoritism for Democratic rival Hillary Clinton by Time Warner news channel CNN by blocking the deal. President-elect Trump then took to Twitter in mid-January to deride CNN after a meeting at Trump Tower with AT&T CEO Randall Stephenson.
Twitter, it's now clear, is President Trump's favored venue for making his thought-of-the-moment known to all.
An aggressive stand against a deal by a would-be president left antitrust experts and acquisitive company executives wondering whether now-President Trump would make good a threat that would breech long-standing government practice.
But how much influence will the President really try to exert over merger reviews? His appointments to antitrust positions so far are veteran hands in the field, and the views they've expressed are well within traditional practice for competition enforcement. His picks include acting FTC Chairman Maureen Ohlhausen, who has been an FTC commissioner since 2012, and former DOJ official Maken Delrahim, named to return to that agency as head of its Antitrust Division.
The pair, their deputies and Ohlhausen's fellow commissioners will have to simply ignore the president's likely Twitter tirades regarding megamergers that are before the agencies, said former FTC Chairman William Kovacic, now director of George Washington University's Competition Law Center. Speaking as part of panel on the Trump administration antitrust priorities at the American Bar Association's spring antitrust conference, Kovacic said great harm could come to the agencies standing with the public if the president tries to insert himself into deal reviews through his tweets.
If the outcome of a merger review matches demands in the president's tweets the public will the decision was fixed, Kovacic told attendees.
The only antidote to suspicion caused by the president's tweets is for the agencies to be more transparent, which they could do by issuing more public guidance on how they tackle specific competition issues and to issue more public explanations of how they reached decisions on specific mergers.
Beyond naming DOJ and FTC competition enforcers, the White House has kept its hands off of merger investigations since the Nixon administration. As an independent agency, the FTC is well-insulated from presidential interference, but the DOJ is actually part of the administration and is more vulnerable to meddling should the person in the Oval Office decide to crash the firewall. (The Time Warner deal is being reviewed by DOJ.)
Trump has kept dealmakers fretting since the election by calling for the antitrust enforcers to judge deals on criteria beyond the impact on consumer welfare, the focus they have based their decisions on for the past four decades. The president, for instance, has suggested that deals also be considered according to their impact on job creation--a shocking suggestion in antitrust circles.
When Donald Trump met in January with the CEOs of German chemical company Bayer (BAYN) and U.S. seed giant Monsanto (MON) at Trump Tower the execs talked up their $66 billion merger plans by pointing out they were committed to spending $8 billion on new research and development and adding 3,000 new jobs as well as keeping 9,000 other jobs in the U.S. if the merger goes through.
Their pitch was an appeal to Trump's repeated call for companies to preserve, and even bring back, jobs in the U.S. Only a few weeks before, President-elect Trump took to Twitter to tout a deal late with United Technologies (UTX) - Get Report unit Carrier to keep nearly 1,000 jobs at an Indiana plant that had been scheduled to shift the work to Mexico.
Covington & Burling partner Ted Voorhees agreed that merger enforcers will have to ignore the Twitter feed.
"I think there will be tweets, but I would not overstate the danger of the tweets," he said."There is a danger here with public perception," Voorhees said. "We've already seen that the president has difficulty restraining himself from tweeting things but the administration that been put around him has shown the ability to ignore the tweets and to disagree" with the pronouncements that flow from Trump's thumbs.
Voorhees said he does not expect there to be any meaningful break from established antitrust practice under Trump. "I would not expect any major difference in the new administration versus the Obama administration versus the George Bush administration," he said.
Kovacic said the reputation of the agencies depends on Trump's picks holding the line and resisting the call to add concerns that are outside the traditional purview of antitrust enforcers, such as job creation.
"The agencies should be wary of promising specific enforcement decisions ... based on employment effects," Kovacic said. Otherwise, "your capacity to do your job properly is going to erode and will disappear."