The Justice Department’s antitrust investigation into four automakers who agreed to abide by stricter emission standards being rolled out in California is reviving concerns that the Trump administration is weaponizing its competition enforcers against political rivals.
California reached the agreement with BMW, Ford, Honda and Volkswagen in July in an effort to counter the administration’s plans to ease restrictions on greenhouse gas emissions and to set the pace for other manufacturers.
{mosads}“I now call on the rest of the auto industry to join us, and for the Trump administration to adopt this pragmatic compromise instead of pursuing its regressive rule change,” California Gov. Gavin Newsom (D) said at the time. “It’s the right thing for our economy, our people and our planet.”
But in September, The Wall Street Journal reported that the Department of Justice’s (DOJ) Antitrust Division was investigating whether the agreement violated the nation’s competition laws against collusion. The Journal’s sources said that the deal could potentially limit the types of cars consumers are able to purchase.
The move outraged Democratic lawmakers, who suspect that the investigation is politically motivated. The probe was also revealed as the administration intensified a long-running legal and political battle against California and just before the Environmental Protection Agency (EPA) announced that it would revoke the state’s authority to set its own emissions standards.
On Sept. 6, the same day that the Journal reported on the DOJ investigation, the Trump EPA and Transportation Department sent a joint letter to California regulators warning of “legal consequences” over the agreement with automakers.
The escalating battle is creating regulatory uncertainty for the transportation economy, which accounts for a third of greenhouse gas emissions in the U.S., at a time when there is increasing global concern about climate change.
Democrats were outraged that a law enforcement agency like the DOJ would be drawn into what they saw as a political fight. In response, earlier this month, the chairmen of the House Judiciary Committee and its antitrust subcommittee announced that they would expand their broad investigation of the administration to probe the allegation.
“There is virtually no antitrust theory that the Justice Department can use to prove that this agreement will unreasonably restrain trade or otherwise violate the antitrust laws,” Reps. Jerrold Nadler (D-N.Y.) and David Cicilline (D-R.I.) said in a statement. “Using the Department of Justice to investigate or attack perceived political enemies—whether they are individuals, states, or major corporations—is another example of this President’s disregard for the rule of law.”
Nadler and Cicilline said they would submit document requests to the Justice Department and schedule hearings as part of their inquiry.
The Justice Department declined to comment. Makan Delrahim, who leads the DOJ’s Antitrust Division, has pushed back against the attacks from Democrats.
“No goal, well-intentioned or otherwise, is an excuse for collusion or other anti-competitive behavior that runs afoul of the antitrust laws,” he wrote in a USA Today op-ed this month. “Those who criticize even the prospect of an antitrust investigation should know that, when it comes to antitrust, politically popular ends should not justify turning a blind eye to the competition laws.”
The criticism from Democrats led to some testy confrontations with Delrahim last week during a Senate oversight hearing.
“The automakers’ reported conduct seems to be little more than an effort by regulated companies to petition a state regulator for a more favorable rule — something that happens all the time between state and federal regulators,” Sen. Amy Klobuchar (D-Minn.), a presidential contender, told Delrahim. “Quite frankly, the antitrust investigation into these automakers seems less to do with protecting competition than intimidating parties that don’t fall into line with the Trump administration’s plan to relax emission standards.”
{mossecondads}Delrahim adamantly denied that the White House had pushed him or other DOJ officials to take action against the automakers, arguing that it is normal for antitrust enforcers to be concerned about such agreements between competitors within an industry.
“They cannot cooperate amongst themselves and I could name at least four or five other investigations which are similar as far as collusive activity after which we have inquired,” Delrahim said at the hearing.
In another exchange, Delrahim bristled at questioning from Sen. Sheldon Whitehouse (D-R.I.).
“I’m someone who’s owned two Priuses and one of the first owners of Tesla, and I’ve lived in California,” Delrahim said. “Believe me, I’m not out there to try to increase pollution into the air.”
But it’s not the first time Delrahim has had to answer questions about his impartiality in enforcing antitrust law. Those questions first arose after his decision to sue to block the $85 billion merger between AT&T and Time Warner in 2017, after media reports detailed President Trump’s efforts to torpedo the deal to retaliate against CNN, a Time Warner subsidiary, over what he saw as unfavorable coverage of his administration.
The issue came up again after the department approved a merger between T-Mobile and Sprint, two of the nation’s four major wireless carriers. Democratic lawmakers raised concerns about special treatment after The Washington Post reported that T-Mobile executives had spent hundreds of thousands of dollars in stays at the Trump International Hotel in Washington during trips to pitch the deal to federal regulators.
In both cases, Delrahim denied that politics or presidential self-dealing played any role in his enforcement decisions, or that they were influenced by the White House.
But the automaker investigation is raising more questions, even from critics who have pushed for the DOJ to take a tougher stance against corporate consolidation.
Sandeep Vaheesan, the legal director for the Open Markets Institute, says that the investigation raises concerns both about the Justice Department’s priorities and what he sees as antitrust enforcers’ inability to distinguish between harmful and beneficial “collusion” among industry players. Vaheesan also questioned Delrahim’s legal reasoning behind the investigation.
“I think the conduct at issue here appears to be protected petitioning and for them to probe into the automakers’ agreement in spite of that is very revealing,” he said. “It does suggest that the antitrust division is picking to use its powers to advance the White House’s agenda on environmental policy.”
“Even if they ultimately don’t bring a suit, the investigation itself will get other car companies to think twice before working with states like California to raise emission standards to promote air quality,” Vaheesan added.
Jeffrey Blumenfeld, an attorney with Lowenstein Sandler who served two stints at the DOJ’s Antitrust Division under Republican presidents, also said that he doesn’t believe the agency has solid legal grounds to justify an investigation. Blumenfeld said the questions about political influence from the White House will do severe damage to the DOJ’s work going forward.
“Once people begin to suspect that law enforcement is not based on the law and is not even handed — once a law enforcement agency loses that moral authority, I don’t know how you get it back,” he said.