#CCRewind: The Politics of Antitrust Enforcement

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June 14, 2018

As they near the end of their fellowship, the 2017-18 Millennial Fellows have each chosen a piece from the Direct Message archives to reflect on. Here's Becky on why she picked this particular article: 

In the wake of the AT&T-Time Warner ruling, it is useful to revisit the theme of politics in antitrust. As head of the Department of Justice Antitrust Division Makan Delrahim said at an event the day the ruling was released, "Antitrust has always had a political allure—cast the blame for your ill of choice on corporate power, and let the unswung hammer of antitrust be the promised solution. It’s a populist cry that has slipped in and out of vogue for over a century." Antitrust has certainly captured the public's attention, with increased interest in mergers and the implications of market concentration on consumers. Recognizing the political factors present in antitrust enforcement—including the role of judges appointed by the president in deciding antitrust cases—helps us move toward a more nuanced understanding of this area of the law. 

When the news broke that the Department of Justice would be challenging the merger between AT&T and Time Warner Cable in November 2017, speculation that it was politically motivated soon followed. After all, the 45th president had been vocal about rejecting the deal during his campaign: “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.” With his speculations that “pricing is going to go up” because of the deal, Trump’s campaign promise on its surface may seem like it was stemming from legitimate antitrust concerns. At the same time, however, President Trump has also singled out CNN, calling it “Fake News CNN” and “THE LEAST TRUSTED NAME IN NEWS” in his tweets, casting doubt onto the objectivity of the antitrust case against AT&T and Time Warner.

Though the premise of presidential influence in the merger review process is indeed dangerous in itself, it is important to not lose sight of the significance of the case in setting precedent in enforcement actions against vertical mergers and foreclosure theory generally (the Justice Department’s theory of harm in part discusses AT&T’s economic incentive to foreclose access to content or to raise costs for competitors).

Given the president’s statements, nonetheless, AT&T tried to argue in court that the lawsuit represented “selective enforcement” arising from presidential interference in what should be the objective merger review process. The company relied on this argument to request detailed email and phone logs between the White House and the Department in pretrial proceedings. Judge Richard J. Leon, who is overseeing the trial, blocked the request, stating that “[d]efendants have fallen far short of establishing that this enforcement action was selective.”

This isn’t the first time that the question of whether antitrust law can be politicized has been raised in U.S. history. In 1971, President Richard M. Nixon considered threatening three major television networks—ABC, NBC, and CBS—with antitrust prosecution in an attempt to sway their negative media coverage of his presidency. White House recordings at the time captured the president discussing the possibility: “If the threat of screwing them is going to help us more with their programming than doing it, then keep the threat…. Our gain is more important than the economic gain. We don’t give a goddam about the economic gain. Our game here is solely political.”

The specter of presidential overreach is an extreme example of how politics may jeopardize the impartiality of antitrust law enforcement. Utilizing antitrust enforcement as a political tool is unquestionably a threat to rule of law. Even just the appearance of undue political influence is dangerous, as it both distracts us from and makes us doubt the antitrust merits of the case. Antitrust enforcement should be driven by sound theories and objective evidence, not by capricious politics. Yet, U.S. antitrust enforcement nonetheless operates within the constraints of larger political factors, including the appointment of antitrust officials.

With each new administration, the president has the opportunity to appoint new leadership overseeing the antitrust agencies, which has implications for antitrust enforcement. Though these officials operate independently of the president, they are appointed with the expectation that their ideologies are aligned with the president’s. With the appointment of Makan Delrahim as the Assistant Attorney for the Antitrust Division at the Department of Justice and the nomination of Joseph Simons to chair the Federal Trade Commission, the Trump Administration seemed to signal an approach to antitrust enforcement that focuses on economics and disfavors interventions—a marked departure from the Obama Administration, which had been rather active in enforcement actions during its second term. Indeed, Professor Steven C. Salop has found that elections have an impact on antitrust enforcement in terms of the types of cases challenged. The Justice Department under the George W. Bush Administration brought significantly fewer civil non-merger complaints than under the Clinton and Obama Administrations.

Just as importantly, the allocation of resources is another means through which ideology affects antitrust enforcement. Michael Kades, Director of Markets and Competition Policy at Washington Center for Equitable Growth, found that while the level of merger activity has increased by 56 percent between 2010 and 2016, funding to the Department of Justice Antitrust Division and the Federal Trade Commission has remained relatively the same, with just a 3.7 percent increase in nominal appropriations. As such, antitrust enforcers may lack the resources to pursue more vigorous enforcement. The lack of additional funding reflects the administration’s priorities, and is an uncompromising constraint on antitrust enforcement.

Presidential interference is no doubt an extreme example of how antitrust enforcement may be politicized and rule of law compromised. Other political factors, such as the appointment of political officials and budget allocations, may also affect the political ideologies underlying antitrust enforcement in less nefarious ways. Recognizing their associated constraints enables us to identify ways to move toward more effective antitrust enforcement.