President-elect Donald Trump's choices to oversee his transition team's search for Federal Trade Commission members and the person who will run the Department of Justice's antitrust division gives some reassurance to businesses worried about candidate-Trump's off-the-cuff comments about mergers and competition policy.
Rather than fret that Trump will make good on threats to block mergers of companies whose executives have criticized him or ticked him off some other way, the appointments of conservative scholar Joshua Wright and former DOJ official and Hunton & Williams partner David Higbee to search for prospective FTC and DOJ nominees have given dealmakers and Washington hands every reason to believe the incoming administration's antitrust policies will be in line with traditional Republican practice, which is to approach mergers with a light touch.
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Editor's pick: This story was originally published on Dec. 23, 2016.
The test of that faith will come when Trump actually announces his picks, which will include an assistant attorney general to run the Justice's antitrust division and three FTC members to fill the seats already vacated by the Republican Wright, Democrat Julie Brill and the predicted resignation of Democratic chairwoman Edith Ramirez.
"I expect the direction the Trump Administration takes will be driven largely by the individuals who end up on in leadership positions at the Antitrust Division and the FTC," said Logan Breed, an antitrust partner at Hogan Lovells.
Michael Iasparro, a partner at Hinshaw & Culbertson, said if Trump's cabinet-level nominations so far are an indication, dealmakers should expect "a more pro-business approach that hearkens back to the Reagan days when antitrust was more lax than we've seen recently." Given Trump's management style, which is to delegate authority, "I would expect antitrust appointees to have a lot of discretion to dictate policy."
It's unlikely that any conceivable appointee would allow Trump to use antitrust policy as a tool for political vengeance, as he hinted he might do when he was stumping for votes, but there are some other legitimate questions about where the next administration will take antitrust policy.
One is where a Trump Administration will take health care antitrust. Coupled with a promise to repeal President Obama's Affordable Care Act is his campaign's health care policy statement, which promised to follow free market principles and sound policy in order to broaden health care access and improve the quality of care.
If former commissioner Wright's views are any indication, a Trump FTC might be more amenable to allowing hospital mergers when the parties claim their deals will encourage more efficient operations. Wright has pressed his colleagues to be more accepting of efficiency claims generally and hospital deals are one particular area where the commission has been dismissive of predictions that mergers will lead to efficiencies substantial enough to override any competitive harms. A Trump commission might also be willing to shift more oversight of hospital mergers to the states, some of which have been willing to allow mergers that reduce the number of surplus hospital beds.
"An FTC led by Trump appointees is going to be likely to take more seriously any claims about merger efficiencies across all industries," "said Iasparro, who represented Illinois' OSF Saint Anthony Medical Center in its effort to acquire Rockford Health System. The FTC blocked that deal in 2011. "It will be fascinating to see if that approach translates to the health care industry," he added.
Others are betting Trump will create a more favorable environment for aerospace and defense M&A because of his call to ramp up defense spending. "The substantial growth in the sector may make it a target for M&A activity and raises the question of how a Trump administration will address antitrust concerns in defense industry transactions," wrote McDermott Will & Emery lawyers Jon Dubrow and Ryan Leske in a client alert. Despite Trump's unpredictability on the campaign trail, "the entrance of a Republican administration and presumably pro-defense, pro-business president suggests a more permissive antitrust policy for transaction in this sector."
If Trump's appointees do lead to a shift in merger and competition policy, they could be setting a course that could dictate the direction of antitrust actions for the next four to eight years.
His comments on the campaign trail showed that Trump has at least mused over the idea of breaking with the bipartisan consensus that antitrust enforcement decisions should promote consumer welfare, be based on economic analysis, encourage efficiency in business relationships and guard against business relationships that reduce competition.
In October Trump said that he would block megadeals like the acquisition of Time Warner (TWX) by AT&T (T) . The statement was seen as a threat to big media companies, which Trump said had favored his Democratic rival Hillary Clinton. He also threatened to subject Jeff Bezos' ownership of both Amazon (AMZN) and the Washington Post to antitrust scrutiny. Trump complained that Bezos is parlaying the political influence that comes with ownership of the Post to lobby politicians against stripping Amazon and other Internet commerce sites of their favorable tax treatment.
Some also question whether he will continue the decades-long pursuit of international cooperation in competition practice. Trump's "America First" philosophy may conflict with the U.S. government's longstanding effort to spread U.S.-style competition policy around the globe through the International Competition Network and other multinational forums that U.S. officials have promoted to make sure that businesses operating in multiple jurisdictions are not subjected to decisions that differ greatly from country to country. Although Trump has no reason to undo participation in the ICN, his criticism of trade agreements like the Trans-Pacific Partnership and the North American Free Trade Agreement indicate he might not pursue international antitrust agreements with the same gusto as previous administrations.
"Transparency, procedural fairness and alignment on non-substantive issues have been areas where the U.S. has been a leader, in the last eight years especially," Breed said. "We may not see that kind of aggressive encouragement any longer. Rather than facilitate international agreements, they may simply not do anything at all."
It's also possible that Trump could be the first president to heed calls to "sue OPEC" as an illegal cartel, in order to break the oil producing countries' price-setting power. Although Trump articulated no overarching antitrust policy on the campaign trail, going after OPEC and any other perceived wrongdoers on the international front would result "in antitrust issues becoming central to a Trump Administration's economic and trade policies," MWE's Emre Ilter wrote in a recent client alert.