DOJ Antitrust Chief 'Not Afraid to Litigate'—Even if That Carries Risk, Deputy Says
ASPEN, Colo. -- DOJ's antitrust chief will continue to take cases involving mergers and acquisitions to court if those combining won't accede to the department's demands -- even if there's a chance of losing a case, his deputy said. Antitrust Division Chief Makan Delrahim is "not afraid to litigate," said Deputy Assistant Attorney General Barry Nigro in Q&A at a Technology Policy Institute event Monday. He replaced his boss, who couldn't attend as planned. Asked about T-Mobile buying Sprint, AT&T's now-successful buy of Time Warner over DOJ opposition, and a Sinclair/Tribune sale that raised FCC questions, Nigro noted he wasn't commenting specifically and is recused on the last deal.
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Nigro sought to disabuse observers who think Justice might not go to court if it could settle. "The notion that this department is going to back down" is "not the case and I think over the past year, you can see that in a lot of the enforcement cases that have been made," he said: The agency won't take half a loaf when it comes to things like divestitures, accepting, for instance, three when it sought six. "We represent consumers, so when we settle a case, our goal is to settle it in a way that’s consistent with resolving our concerns." It's "not just a negotiation to take three rather than the six it sought: We would rather go to court on the six. And if we lose, we lose."
There can be areas with "room for disagreement" between those with merger or acquisition applications and antitrust enforcers, Nigro said. "If there’s competitive harm" and that’s clear from the facts, however, "I don’t see how we can accept those facts" that could cause such harm "just in the interest of compromise."
Nigro laid out some of the rationale for his agency appealing U.S. District Judge Richard Leon's ruling to allow AT&T to buy TW. Saying DOJ thinks Leon got it wrong, Nigro said a final ruling could have much precedent. "If nothing else, we will get some law, and hopefully it will be some good law" with not having had a vertical merger challenge go to trial in about 40 years, he said. The case was appealed to the U.S. Court of Appeals for the D.C. Circuit. AT&T declined to comment immediately.
"The foundation on which the decision was based has implications for how we do merger analysis," Nigro said. "Do firms behave to maximize profits or don’t they? We assume they do. But we believe that some of the findings in the case were based on the assumption that they don’t." The "principles are important enough and we felt strongly enough" that the department appealed, Nigro said. Noting briefs at the D.C. Circuit by the FCC and another by 27 antitrust scholars (see 1808140001), he said that "they highlight some of the same issues. If you haven’t read those, you should read them, they’re important and I think this case is important." The FCC didn't comment.
Nigro also had general advice for M&A applicants, when asked about Sinclair/Tribune. Combining companies could "recognize and acknowledge the issues that they know they are highly unlikely to persuade the government to back off of," he said of deals raising "real issues" that won't be cleared in a month or two. There will be areas where applicants and government "have a legitimate basis to disagree," Nigro said. "The sooner that happens, the better," he said. Sometimes, "they’re hoping that we don’t notice the problems, but that's a strategy that very rarely pays off." Such parties could "be in a situation where you think your deal is going fine, and then you have to play defense," he said. Some advice: "Address it in a very candid way if there are problems." Sinclair didn't comment.
The department is working with the FTC on coming tech/competition roundtables, Nigro said, noting the trade commission is in the lead. Comments were due Monday: 1808200045; the commission declined to comment. "We will be paying very close attention to what people say and what can be learned from those" hearings, he said. It's "a good thing" FTC Chairman Joseph Simons says he wants to look at a broad range of issues, Nigro said. "The first step in developing the law is in thinking about ... these new issues we’re confronting," he said. "These issues will be very important to helping us focus our thinking."