President-elect Donald Trump’s incoming administration will be more favorable to corporate mergers, experts and business groups believe, marking a sharp shift from the Obama years.
Trump’s team is tapping nominees who have offered support for scaling back regulations and oversight as companies in key industries look to consolidate.
But one wildcard may be Trump himself. The president-elect has signaled his opposition to the biggest deal on the table: AT&T’s proposed merger with Time Warner.
Still, many see signs of more relaxed oversight ahead.
{mosads}Trump’s pick to head the Justice Department, Sen. Jeff Sessions (R-Ala.), could play a key role in overseeing mergers seeking legal approval. And one of his key tasks will be tapping the head of the DOJ’s powerful Antitrust Division.
Sessions’s record on antitrust matters is short, but tends to favor industry and fewer regulations.
Randolph May, president of the Free State Foundation, a non-partisan think tank, said the new administration would be different than the last four years, which saw Obama administration regulators crack down on a number of proposed mergers.
“It’s my hunch in a general sense. .. the [DOJ] Antitrust Division under Sessions will probably take a less stringent view of the antitrust laws in the sense of worrying a bit less about potential abuses than the Obama Justice Department,” he told The Hill.
The Obama administration in its later years stepped up its antitrust enforcement, raising objections to numerous multi-billion dollar deals involving some of the biggest players in American business.
In one high-profile case, telecom giants AT&T and T-Mobile walked away their merger plan in 2011 after the DOJ said it would challenge it.
Halliburton recently scuttled its proposed $34 billion merger with fellow oil-field services company Baker Hughes after scrutiny from regulators.
And in 2016, the DOJ blocked Time Warner and Comcast from merging. That same year, Treasury also shut down an acquisition deal between Pfizer and Irish pharmaceutical company Allergan, over tax concerns.
Conservatives have criticized those enforcement actions, arguing the Obama administration took an unbalanced and harsh view to corporate consolidation.
But administration officials have defended their moves, arguing they needed to balance business plans with consumer protections.
“Consumers and workers would benefit from additional policy actions by the government to promote competition,” read a White House report in April on the implications of mergers.
Trump’s incoming team has taken a different stance.
Along with the DOJ’s Antitrust Division, the Federal Trade Commission plays a key role in approving many mergers, as does the Federal Communications Commission in some cases.
Trump’s FTC transition team is headed by Joshua Wright. Wright is known for promoting a free-market approach, believing in letting industry sort out market changes instead of regulators.
But Trump’s landing team picks for the Federal Communications Commission, Mark Jamison and Jeffrey Eisenach, have been the most vocal in publicly supporting corporate mergers, including some more controversial deals.
Vertical mergers, where two companies that offer different services or products combine, have generally had fewer regulatory obstacles. But so-called horizontal mergers, where companies that provide the same services consolidate, have been viewed with extra scrutiny by regulators, with special concerns for how they affect consumers.
Eisenach and Jamison have supported not just vertical mergers but have also argued publicly in favor of many recent horizontal mergers.
Eisenach, in particular, has pushed for further consolidation in the cable business, an industry that consumers often rate poorly.
“The best thing that could happen for U.S. consumers would be substantial consolidation in the cable business,” Eisenach wrote in a 2013 blog post regarding Comcast’s attempt to acquire Time Warner Cable. The companies ultimately abandoned their merger plans after learning the DOJ would seek to block it.
In 2011, Eisenach also argued in favor of AT&T’s planned acquisition of T-Mobile, telling Reuters that the “wireless market is extremely competitive” and the deal wouldn’t hurt consumers. Jamison also argued for the AT&T-T-Mobile merger, which wasn’t completed.
But despite the expectations for a new era of big corporate deals, there are lingering questions about the incoming administration.
Topping that list are Trump’s own views, which are unclear, even as he’s made his opposition clear to some specific mergers involving media companies.
On the campaign trail, he vowed to block Time Warner and AT&T’s planned deal if elected, claiming it would concentrate too much power in one company.
Reports claim that Trump still hasn’t changed his mind, even as executives from the two companies have made efforts to reach out to the president-elect and his advisers.
Crucially, entertainment giant Time Warner owns CNN, a network Trump has repeatedly clashed with and accused of biased coverage.
Trump has also expressed interest in breaking up the already completed Comcast NBCUniversal merger. Trump’s critics say his disdain for NBCUniversal is tied to one of its shows, Access Hollywood. In October, decade-old tapes from the show became public, showing Trump making lewd and disparaging remarks about women, and upending the race.
Some chalk those remarks up to Trump’s personal beefs with the media companies involved, and question the impact it would have on regulators reviewing cases.
Some experts believe Trump’s administration would be more cautious about pursuing antitrust cases against those companies than the president-elect’s remarks might suggest.
“To do something you need a good antitrust case to hold up [in] court,” said Bert Foer, former president of the American Antitrust Institute.
“You’ve gotta be very careful, and you just can’t make judgments about these thing or promises about these things through tweets,” he added, noting that he was not speaking on behalf of the American Antitrust Institute.
The incoming administration is also still getting on its feet and there are many key positions to be filled that would have an important role in merger policy.
Trump must tap a new FTC chairman and Sessions must pick a head for the DOJ Antitrust division.
Free State Foundation’s May said that latter pick is crucial.
“[Sessions] has acknowledged that antitrust is not [an] area of expertise for him,” May said. “That leads me to believe it’s going to be very important as to heads the Antitrust division because it’s quite specialized and there’s a lot of jurisdiction.”
All of that will have the business and legal world’s watching closely.
Doug Brake, an analyst at the tech think tank, Information Technology Institute, says 2017 will yield plenty of opportunities to watch the new administration’s policies take place. He predicted a slew of new proposed corporate mergers and buys in the coming year that will test regulators.
“AT&T-Time Warner is not the last merger we’ll be hearing about in 2017,” Brake said.
“I think that there is going to be more M&A [merger and acquisition] activity coming down the pipe.”