Free Market or Payback? What to Expect Under Trump

Editors' pick: Originally published Nov. 9.

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Donald Trump's remarkable victory in Tuesday's presidential election makes predicting the regulatory environment for many sectors of the U.S. economy impossible to do now.

One of those areas is merger policy. Will Trump be a typical hands-off Republican when it comes to overseeing megamergers, or will he use competition policy as a way to lash out at companies and individuals against whom he bears a grudge?

As in other policy areas, Trump's campaign trail pronouncements regarding mergers have been skin-deep and marked by contradictions and inconsistencies. But if his off-the-cuff remarks are any guide to what he'll actually do, the presumptive president-elect isn't above using antitrust policy to carry out vendettas.

In October, when he was the Republican nominee, Trump said he would block megadeals like the acquisition of Time Warner (TWX) by AT&T (T) , if elected. That the president typically claims no direct role in merger reviews, even those conducted by an executive branch agency like the Department of Justice, didn't seem to give him pause about boasting what he would do. Trump has had a long-running feud with big media companies over what he has said was blatant favoritism for Democratic rival Hillary Clinton and blocking the deal would certainly be payback.

Similarly, in a May interview with Sean Hannity, Trump implied he would bring antitrust law to bear in reviewing Jeff Bezos' ownership of both and Amazon (AMZN)  and the Washington Post, another media outlet that has angered Trump.

Trump complained that Bezos is "using the Washington Post for power so that the politicians in Washington don't tax Amazon like they should be taxed."

Trump's gracious comments after winning the election Tuesday night indicate he is willing to let bygones be bygones, but that still leaves the question of how he'll resolve the conflict between his populist appeal and his, at least nominal, fealty to the GOP's laissez-faire economic principles.

Michael Weiner, co-leader of Dechert LLP's antitrust practice summed up questions a Trump presidency poses to mergers: "Mr. Trump's pronouncements on the AT&T/Time Warner deal, as well as on Jeff Bezos' ownership of the Washington Post, suggest a vigorous approach to antitrust in the media context. Similarly, Mr. Trump's statements with regard to health care reform suggest an interest in enhancing competition in that sector of the economy. What remains to be seen is the extent to which his penchant for dealmaking, which would seem to make him more ideologically predisposed to be merger friendly, is offset by the working class populism ideology, which might emphasize jobs and income inequality concerns over economic efficiency."

One area where Trump is likely to be more permissive of mergers is in the energy sector. Trump harshly criticized the Obama administration for harming the coal industry with what he said was excessive environmental regulation. It's likely that point of view would translate into appointing antitrust enforcers inclined to help the fossil fuel industry improve efficiency and restore profitability. For instance, a Trump DoJ might have been willing to allow Halliburton  (HAL) in its attempt to address antitrust concerns proposed by the company's $35 billion plan to acquire Baker Hughes (BHI) for $35 billion. That deal was challenged in court by the Justice and the companies dropped their merger plans. Perhaps Trump would also give an easier ride to General Electric's  (GE) plans to spin off its energy business and merge it with Baker Hughes. That deal is now before DoJ and is believed to pose fewer antitrust concerns than the Halliburton transaction.

Another wild card is who Trump will name to carry out competition policy. Campaign supporter Rudolph Giuliani is believed to be under consideration to run the DoJ as attorney general and it's possible Trump's antitrust picks to serve at the DoJ and the Federal Trade Commission could be pulled from Greenberg Traurig LLP, the law firm Giuliani left last month, which has a big antitrust practice. Bracewell LPP, known as Bracewell & Giuliani before he left in January, also has a large white collar litigation and merger practice.

Former FTC Chairman Bill Kovacic said at an antitrust conference in April that gauging who Trump would name to the antitrust agencies is difficult. "Trump will have a hard time getting first-rate people to go into the agencies," he said.

The former reality TV star has a penchant for voicing inconsistent, contradictory views on trade and competition policy, making it hard for any experienced hand to feel confident of surviving a Trump administration with reputation intact.

How Trump thinks about antitrust generally is unclear and he has been on both sides of it. Trump's played a role in the death of the USFL, a professional football league launched to take on the NFL.

According to press accounts, Trump persuaded fellow owners to move its 1986 season from summer to fall to compete directly with the established powerhouse and to file an antitrust lawsuit against the NFL over TV rights and players' salaries. Trump hoped for a financial windfall from the suit but the USFL won only $3 and died before the fall season could begin.

"Donald Trump is the only presidential candidate in my lifetime to be a plaintiff in an antitrust case," Kovacic said. In 1988, Trump was also a defendant and had to pay a $750,000 civil penalty to settle charges that he had violated the Hart-Scott-Rodino Antitrust Improvements Act by acquiring stock in two companies without notifying the DoJ and the FTC first.

Finally, he was sued by Boardwalk Properties for allegedly attempting to monopolize casino gambling in Atlantic City, N.J. Trump eventually prevailed in that case.

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