When President Trump took office in 2017, many wondered what direction his administration would take on antitrust enforcement. On March 27, 2017, the President announced his intention to nominate Makan Delrahim as Assistant Attorney General for Antitrust at the Department of Justice. Public commentary around his nomination tended towards the view that the new administration would adopt a less aggressive approach to antitrust enforcement, friendlier to mergers than the administration of President Obama.
Delrahim won Senate confirmation on a 73-21 vote on September 27, 2017. While he definitely returned the Division to a conservative approach to antitrust enforcement, he was an innovative and entrepreneurial AAG who, along with Federal Trade Commission Chairman Joseph Simons, advanced significant initiatives with respect to vertical mergers, international cooperation, single-firm conduct investigations of the allegedly dominant platform companies, and labor market restraints that laid the foundation for the follow-on initiatives during the Biden Administration. Delrahim also initiated a significant effort to harmonize antitrust law with intellectual property rights, and to remove businesses from the regulatory restrictions of stale consent decrees and final judgments—to allow them to better compete today, free from constraints agreed to or imposed on them decades ago.
Based on the number of merger challenges filed annually, Section 7 litigation at the Division during the Trump administration remained generally consistent with the previous administration, likely confounding those who predicted a looser policy. Each of the merger challenges confronted important questions of law that continued to be pursued in the Biden administration.
During Delrahim’s tenure, the Division initiated and tried two merger cases to a verdict, sought to enjoin two mergers and one minority investment that the parties abandoned or settled before trial, submitted another merger matter of concern to binding arbitration with respect to the definition of the relevant product market, and filed a statement of interest in a merger case filed by the states for which the Division had entered into a settlement.
In AT&T/Time Warner, the Division litigated a vertical merger case for the first time in four decades. DOJ alleged that AT&T would raise the costs of its video distribution rivals by leveraging its control of Time Warner’s video content, harming consumers when increased costs get passed through in the form of higher subscription fees. Judge Leon of the District of D.C. denied the Division’s injunction request, finding that Time Warner’s “must have” content would not increase bargaining leverage for the merged firm, and the D.C. Circuit affirmed.
In Sabre/Farelogix, the Division challenged a proposed $360 million acquisition in the travel technology industry, alleging that Sabre (a two-sided platform) competed directly with Farelogix on one side of the market to provide ticket-booking services to airlines. The court denied the injunction, ruling that because Farelogix only served airlines, the two companies did not compete in the same relevant market based on the Supreme Court’s Ohio v. American Express Co. holding that “[o]nly other two-sided platforms can compete with a two-sided platform for transactions.” The Division filed a conditional appeal to the Third Circuit, but after the United Kingdom’s Competition & Markets Authority (CMA) blocked the transaction, the parties abandoned the merger. The Division won a motion to vacate the district court decision, limiting the potential for that decision to affect the legal review of future challenges to mergers involving two-sided platforms.
Short of trial, the Division twice filed a complaint and the merging parties abandoned rather than test the Division’s evidence. In Visa/Plaid, the Division alleged that the proposed acquisition would eliminate an independent nascent competitive threat (Plaid) to Visa’s monopoly position in the market for online debit services. In Quad/Graphics & LSC Communications, the Division filed suit to enjoin Quad/Graphics from acquiring LSC, alleging that the transaction would combine the two most significant magazine, catalog, and book printers in the country.
In Geisinger Health/Evangelical Community Hospital, the Division challenged a partial acquisition agreement between two competitors of inpatient general acute-care services in central Pennsylvania, where Geisinger’s (non HSR-reportable) investment of $100 million gave it substantial governance rights in Evangelical. After the Division challenged the agreement under both Section 1 and Section 7, Geisinger agreed that its investment would be passive with no governance rights, limited to a 7.5% equity interest, and significantly below $100 million.
In a novel twist, Delrahim advanced an innovative approach to resolve a matter short of full litigation in the case of Novelis/Aleris, in which the Antitrust Division and the parties agreed to arbitrate their dispute as to the definition and scope of the relevant market. In the arbitration, DOJ convinced the arbitrator that aluminum automotive body sheet is a relevant product market, triggering the parties’ agreement to divest the acquiree’s entire aluminum automotive body sheet operations in North America. This was the first (and to date, only) use of arbitration by the Division in an antitrust merger enforcement action. After trial, the Division built on this experience by issuing guidance on the use of arbitration, to help identify cases where arbitration might be used efficiently and effectively.
In T‑Mobile/Sprint, multiple state attorneys general sued to block the merger of the two wireless telecom providers. The Division, with additional states, reached a settlement with the merging parties that required the divestiture of Sprint’s prepaid wireless business and wireless spectrum to satellite provider Dish Network (along with cell sites and network access). After the trial initiated by the first set of state plaintiffs, the Division submitted a statement of interest in support of the restructured merger. In February 2020, the trial court denied the states’ request to enjoin the merger, noting that the Division had “expended considerable energy and resources to arrange the entry of DISH as a fourth nationwide competitor.”
Including T-Mobile and Geisinger, DOJ entered into 35 merger settlements during President Trump’s first term, including two that were entered into after a complaint was filed. Approximately 24 other transactions were abandoned or restructured in response to the Division concerns, without the filing of a complaint. Several themes in these settlements are of particular note.
Disentangling. Two settlements unwound consummated mergers: TransDigm/Takata (commercial airplane restraint systems transaction, not HSR-reportable) and Parker-Hannifin/CLARCOR (aviation fuel filtration systems).
Agriculture. The Division challenged significant mergers in agriculture, including Dow Chemical/Dupont (certain herbicides and insecticides) and Bayer/Monsanto (genetically modified seeds, foundational herbicides, seed treatments, and vegetable seeds). The Bayer/Monsanto settlement—requiring approximately $9 billion worth of assets to close the proposed $66 billion acquisition of Monsanto—was the largest negotiated merger settlement the Division had ever secured. Another settlement—Danone/WhiteWave Foods—alleged harm in the market for “the purchase of raw organic milk in the northeast,” a monopsony concern.
Telecom. In CenturyLink/Level 3, the Division required the parties to divest telecommunications networks in three cities (Albuquerque, Boise and Tucson) and offer leases for unused dark fiber strands in 19 states in order to close their $34 billion merger in October 2017.
Media and Entertainment. In Disney/Fox, the Division required that the Walt Disney Company, owner of sports network ESPN, divest 22 regional sports networks to address concerns that the merged entity would have the ability to raise fees for the licensing of cable sports programming in order to close its $71 billion acquisition of film and television studio and cable channel assets from Twenty-First Century Fox in June 2018. A similar theory of harm was articulated in the Division’s challenges to Nexstar/Tribune and Gray/Raycom mergers, alleging harm in the market for the licensing of certain television retransmission consent rights (versus earlier broadcast station merger challenges limited to effects in the market for spot advertising).
Defense. The Division was also very active in obtaining relief in significant defense and security-related mergers. The Division required divestiture of encryption technology to clear Thales’s acquisition of Gemalto. Defense contractors Harris and L3 divested a night vision devices business to merge. United Technologies Corporation and Raytheon were required to divest military airborne radios, military GPS systems, and reconnaissance satellite components to close their $135 billion merger. Communications and Power Industries was required to divest its business manufacturing large geostationary satellite antennas in order to complete its acquisition of General Dynamics’ SATCOM Technologies. Smith’s Group was required to divest the global explosive detection business of Morpho Detection to complete its acquisition of Morpho.
United Technologies was required to divest Rockwell Collins’s pneumatic ice-protection systems business (for fixed-wing aircraft, including military transport planes) to complete its acquisition of Rockwell Collins. Ultra Electronics/Sparton abandoned their $234 million merger to combine what the Division called the only two qualified suppliers of certain sonar buoys to the U.S. Navy.
Vertical mergers assumed a higher profile in both the DOJ and Federal Trade Commission during the first Trump administration. In addition to the challenge to AT&T/Time Warner, the Division alleged harm from another significant vertical transaction. In CVS/Aetna, the DOJ required CVS to divest Aetna’s Medicare Part D prescription drug plan to WellCare, a competing health insurer to Aetna, to clear the parties’ vertical merger in October 2018. After a Tunney Act hearing that probed the vertical issues in the case, the final judgment was entered in September 2019.
The DOJ and FTC collaborated on the drafting and issuance of the 2020 Vertical Merger Guidelines, which captured modern economic thinking and updated the badly out-of-date vertical merger theories in the 1984 DOJ Merger Guidelines.
Delrahim recognized that the Division’s mission is to “get the right result,” “not to bring the most enforcement actions.” Getting the right result “in an efficient manner” often means “remedy[ing] fully the sources of anticompetitive harm” through consent decrees. “Only when that is not possible, should [the Division] litigate.” True to that sentiment, the DOJ implemented significant updates to the merger review process including: (1) publishing a model voluntary request letter; (2) publishing a model timing agreement; and (3) reforming timing agreements. These updates sought to limit the scope of Second Requests and thereby reduce the burden on parties complying with those requests. The Division also updated and reissued its Merger Remedies Manual to make the settlement process more transparent and efficient. Pursuing similar policy objectives, the FTC and DOJ collaborated to propose a reporting exemption for de minimis investments of 10% or less to lessen the burden for “certain minority investments that do not raise competition concerns.”
The Division initiated several important Section 1 investigations during Delrahim’s tenure, most notably in education, healthcare, real estate, and technology markets that resulted in several important consent decrees. An investigation in the television broadcasting industry led to multiple settlements with station ownership groups and consulting firms for sharing commercially sensitive, non-public information about spot advertising sales in 2018 and 2019. An investigation into the National Association of REALTORS led to a settlement eliminating various rules related to the listing of residential real estate in November 2020. Atrium Health eliminated steering restrictions in provider contracts with insurers in North Carolina. Henry Ford Allegiance Health settled the Division’s Section 1 lawsuit alleging the hospital agreed with competing hospitals not to market in their respective geographic areas. The Division entered into consent decrees with Learfield IMG, requiring them to compete for multimedia rights contracts for universities’ athletic programs, and with the National Association for College Admission Counseling, requiring that they rescind rules limiting student recruiting. The Division initiated an investigation of Washington, DC-area private schools, which had all announced they would no longer offer Advanced Placement classes, concluding that competition concerns were addressed by assurances that none of the schools were bound to follow the common policy.
During the latter half of the administration, the Division began assessing “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.” The Division cited consumer, business, and entrepreneur concerns regarding practices in search, social media and online retail services as fueling this assessment. This assessment of competitive conditions culminated in October 2020 when the DOJ and 11 state Attorneys General filed a complaint alleging that Google “entered into a series of exclusionary agreements that collectively lock up the primary avenues through which users access search engines, and thus the internet, by requiring that Google be set as the preset default general search engine on billions of mobile devices and computers worldwide and, in many cases, prohibiting preinstallation of a competitor.”
The Division also engaged in programmatic efforts to improve enforcement related to digital platforms and emerging technologies. As the technology sector innovated, DOJ worked to keep up—offering attorneys opportunities to take classes on blockchain, artificial intelligence, and machine learning at MIT. When the DOJ and FTC hosted the 19th annual International Competition Network conference held virtually during the COVID-19 pandemic, they chose to put the focus primarily on antitrust enforcement in the digital economy. These efforts and others make clear that the DOJ in the first Trump administration had been focused on: (1) ushering in a new era of antitrust enforcement fit for a digital age; and (2) coordinating enforcement on a global scale to match the global impact of the digital platforms and technologies at issue.
The Division also initiated an effort to understand and investigate the competitive effects associated with the use of platforms that aggregate vast quantities of data and provide pricing and output suggestions to individual participants. Though the initial efforts were focused on matters where the parties had entered into agreements to fix prices or rig bids, the policy concern was clear: use of real-time data to manipulate online markets was a significant risk area that should receive dedicated attention as part of the antitrust enforcement agenda.
The Division’s efforts to encourage growth and innovation in digital markets extended to eliminating barriers that too often prevent the adoption of new technology. DOJ’s two-year review of the GSM Association (“GSMA”)—a trade association of mobile network operators—is a significant example of this concern. The Division concluded that the GSMA steered the design of embedded microchip technology for subscriber identification (eSIMs) in mobile devices and that its standard-setting procedures threatened the adoption of new technologies that could increase competition among mobile operators. As a result of the investigation, the GSMA formulated a plan to adopt new procedures to mitigate the concerns raised by the DOJ.
The Division made significant strides in enforcing compliance with consent decrees during Delrahim’s tenure, initiating several high-profile moves to enforce existing consent decrees. In General Electric/Baker Hughes, the Division required GE to make daily payments for delaying the completion of the water management divestitures promised in 2017, and to pay the Division’s attorney’s fees and costs for pursuing compliance. In Live Nation/Ticketmaster, after repeated decree violations by the parties, the Division secured a five-and-a-half-year extension and amendment of the consent decree to add a monitor and penalty provisions. In CenturyLink/Level 3, the Division secured a two-year extension of the consent decree, a monitoring trustee and to pay the Division’s investigation costs after repeated solicitations of customers of the divestiture buyer in Boise, Idaho. Following these consent decree actions, in August 2020 the Division created the Office of Consent Decree Enforcement and Compliance for future decree enforcement matters.
Delrahim significantly increased efforts to protect workers from anticompetitive conduct. Notably, the DOJ entered civil settlements to protect workers who had been affected by “no-poach” agreements. For instance, the DOJ reached a settlement with two of the largest rail equipment suppliers operating globally, after alleging they “restricted competition for U.S. rail industry workers.” The DOJ also intervened or filed briefs in a variety of labor-related cases, including a private action challenging alleged agreements by Duke University and the University of North Carolina not to compete for medical faculty.
Delrahim moved to ensure that regulations, in the form of outdated decrees and settlements, and government processes were not an impediment to growth and competition. Consistent with this position, in April 2018, the DOJ launched an initiative to terminate hundreds of legacy consent decrees and antitrust judgments that had been on the books for decades. Delrahim recognized that these judgments not only clogged dockets and wasted taxpayer dollars, but they also no longer protected competition in the ways originally contemplated in the decrees, given changing market conditions. As a result of this initiative, 19 legacy judgments were terminated. One notable judgment termination was the Paramount consent decree, which for over seventy years prevented the vertical integration of film studios owning theaters.
Additionally, Delrahim significantly expanded the Division’s filing of amicus briefs and statements of interest in private antitrust litigation, seeking a greater role for the Division in advocating for the development and application of antitrust law outside of its own investigation and litigation efforts. A focus of these efforts was curbing self-interested regulations by professional boards or other industry groups and dismissing antitrust challenges to the assertion of IP rights.
Delrahim had another important success in defining the boundaries of antitrust law when he led an international effort to establish standards of procedural fairness in competition enforcement investigations and resolutions around the world. The Multilateral Framework on Procedures ushered in a new era of international harmonization and cooperation to ensure business innovation was not stifled by unnecessary or unfair antitrust process.
Under Delrahim, the Division initiated, managed, and handed off to its successors, a docket of aggressive antitrust enforcement matters and policies, including a more skeptical approach to vertical mergers, increasing concern about the elimination of nascent competitors and evaluation of harms in nascent or newly developing markets, and major litigation and forward-looking enforcement efforts in digital markets and labor markets.
Now that the baton has been passed back, we expect that it will be “déjà vu all over again” for the second Trump administration. Delrahim’s aggressive approach to investigating and challenging large-firm conduct continued during the Biden Administration and seems likely to continue in President Trump’s second term, under the leadership of AAG Gail Slater.
With two remedies hearings in the Google Search and AdTech cases, trial dates in several major matters on the docket—Agri Stats, Live Nation, Visa, HPE/Juniper—and a pipeline of additional potential trials—Apple, RealPage—the second Trump administration is likely to expand on its first term antitrust initiatives, if given sufficient resources.
