Podcast: U.S. Antitrust and Merger Control Outlook Under The Biden Administration


    Host Julie-Anna Needham is joined by Dealreporter's Chief Correspondent Esther D'Amico to discuss what U.S. antitrust and merger control policy could look like under the Biden administration. How will new antitrust subcommittee chair Sen. Amy Klobuchar affect future antitrust legislation in America? Could Big Tech and Healthcare be in the crosshairs? Dealcast is presented by Mergermarket and SS&C Intralinks.

    In this podcast, you’ll hear about:

    • What's happened on the antitrust front since Joe Biden took office.
    • Democratic Senator Amy Klobuchar taking over as the head of the Senate Antitrust Subcommittee.
    • What updating antitrust statutes actually means.



    JULIE-ANNA NEEDHAM: Welcome to Dealcast, the weekly M&A podcast presented to you by Mergermarket and SS&C Intralinks. I'm Julie-Anna Needham. In this episode, we're looking at the incoming head of the Senate Antitrust Subcommittee in the US. I'm joined by Esther D'Amico who's the chief correspondent for Mergermarket in Washington.

    So Esther, can you give a very brief summary of what's happened on the antitrust front since Joe Biden's become president?

    ESTHER D'AMICO: There has been a whirlwind of activity regarding regulation since Biden took office. But on antitrust, it's hard to pinpoint one thing exactly because there's been a lot of talk from Senator Amy Klobuchar on things she'd like to do there. Biden has named Merrick Garland, who is a D.C. district judge, to be the next attorney general for the Department of Justice.

    That is, probably if I had to list as the biggest news as far as antitrust, because even though the US Attorney General is in charge of many things, he has-- it's the DOJ's Antitrust Division that handles mergers and acquisitions. That is the actual antitrust body. But the interesting thing about Biden naming Merrick Garland is that Merrick Garland has a ton of experience in antitrust.

    So he was a former Harvard Law professor. He's taught antitrust law. He's presided over cases in antitrust. This is something that people in the antitrust community are paying a lot of attention to because we will -- if he gets -- now he's been named by Biden, he still has to get cleared by the Senate, and there's some question whether that will happen or not.

    But should he get voted infavorably in the Senate, he will become our next AG, and he'll be an AG who we are expecting to keep an eye on antitrust. That's a huge move. And it's something that the antitrust community is keeping a close watch on.

    JULIE-ANNA NEEDHAM: And you mentioned there about the Democratic Senator Amy Klobuchar taking over as the head of the Senate Antitrust Subcommittee. But as yet, there's no official word on that. So what's the status of this, and why will she become one of the key players for the deal community?

    ESTHER D'AMICO: Well, first, let me say that Senator Amy Klobuchar is a Minnesota Democrat, and she has been the ranking member of the Senate Antitrust Judiciary's -- the Senate Judiciary's Antitrust Subcommittee for the last four years under the Republicans. So the ranking member in Congress would be the opposite party in power. So she's the top Democrat under the Trump administration.

    Now we have a new administration, so the Democrats become the chairs of -- well, we're in a different -- we're in an interesting situation right now because we have a split chamber -- 50 Democratic senators and 50 Republican senators. So under this new administration, with Vice President Kamala Harris's vote, the Democrats will have the majority.

    Now, there's been a holdup in naming her as chair of the subcommittee and naming the chairs of the full committees throughout the Senate because -- and there have been some formal announcements with some chairs, but many are left open right now even though we think we know who will be there. But the holdup has been -- was due to a standoff between the Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell over a power-sharing agreement in the evenly split chamber.

    So that battle was recently more or less settled -- for now, at least -- just last week, and that's going to free up the committee assignment process. So we would expect that Amy Klobuchar along with many other Democrats will be formally announced as the chairs of their committees or subcommittees. So that was a hold-up -- the main holdup.

    JULIE-ANNA NEEDHAM: And we've heard that she's going to be tough on antitrust issues as shown previously by her grilling executives during past hearings and advocating for tougher enforcement. But what do you think we should realistically expect from her when she's in that position?

    ESTHER D'AMICO: Klobuchar is important for us to follow because she will wield the gavel in one of the most powerful Senate panels for dealmakers as far as merger regulations. Like its counterpart in the house, the Senate Antitrust Subcommittee looks at antitrust law and policy. It can hold hearings to scrutinize specific mergers that it may suspect is problematic-- that the chair basically suspects is problematic.

    It has oversight over the two US agencies responsible for carrying out antitrust law and policy. That would be the Department of Justice and the Federal Trade Commission. In short, while there are other committees that may also affect merger reviews, this one will, in many cases, be where all the action starts on the Senate side for our readers.

    I might also add that the House Antitrust Subcommittee, its counterpart, is also important. But since the Democrats continue to hold the majority in the House, as they did prior to the 2020 elections, Representative David Cicilline will retain his position as chair of that panel. That's why today I'm honing in on Amy Klobuchar because she is the new one to hold the gavel for antitrust.

    JULIE-ANNA NEEDHAM: And you mentioned about updating the antitrust statutes, and there's been a lot of talk about that around Washington for a while. But what does that actually mean? What would that involve?

    ESTHER D'AMICO: The antitrust laws were enacted more than 100 years ago, and they largely were enacted in response to the railroad monopolies in this country. Specifically, when they talk about the statutes, they're referring to the Sherman Antitrust Act, which declared that monopolies are illegal, and that was enacted in 1890, and the Clayton Antitrust Act, which became law in 1914, and that prohibits, among other things, mergers that substantially lessened competition.

    There's been an effort in recent years, mostly by Democratic lawmakers but some Republicans including Democrat Klobuchar, to update or, in other words, modernize those statutes to better reflect the 21st-Century economy. So to put this in context for today, large tech firms in the last decade acquired more than 400 companies, many of which are said to be actual or potential competitors.

    Many of those deals were not challenged by the antitrust enforcers or the agencies because they fell under the threshold for merger reviews. The law allows this. Critics charge that Congress and antitrust agencies have allowed the tech giants to regulate themselves with little oversight. But again, this so-called self-regulation doesn't break any laws that I'm aware of.

    Some lawmakers, and not just Democratic ones, argue that, given that situation, is it any wonder that Google controls nearly all of online search, Amazon controls about half of online retail sales, Facebook is more than 58% of the social media market, and Apple is under scrutiny for allegedly being, in the words of Representative Cicilline, both a player and a referee for its App Store policies?

    So the issue, or one of the big ones, comes down to what our current antitrust laws do and don't allow.

    JULIE-ANNA NEEDHAM: So big tech is going to be in the crosshairs. What other things can we expect from Klobuchar this year, and what are the other likely goals?

    ESTHER D'AMICO: I would also say big tech as well as health care. Those have been at the forefront from the last Congress and from both antitrust committees before, and we would expect even more of that going forward but also expect a broadening to other industries as well. If you have a large merger and there's any hint that it could be anti-competitive, I would expect some scrutiny from both the House and the Senate antitrust agencies panel.

    JULIE-ANNA NEEDHAM: And how likely is it that any of our bills will eventually become law?

    ESTHER D'AMICO: Well, there are mixed reviews on that. She is one of the most prolific lawmakers in the Senate when it comes to drafting bills, and she has many related to antitrust. So these include, one, for example, the Consolidation Prevention and Competition Promotion Act. She introduced this in 2019, and it includes provisions that would shift the burden of proof to defendants instead of the federal government plaintiff.

    So, in other words, it would be the merging companies -- if this bill were passed into law, the merging companies would need to prove in court that their mergers will not harm competition. That's huge. It would be a significant change from the legal standard today here. Some people are doubtful that the bill would be able to get the traction it needs in Congress to pass into law despite the new Democratic majority there, but people are watching it.

    As one source reminded us, legislation is just not that easy to pass. But our sources also frequently point to some of Klobuchar's more moderate legislation that may stand a chance. And this includes a bill she introduced with Republican Senator Chuck Grassley of Iowa, and it's called the Merger Filing Fee Modernization Act.

    So this bill would update merger filing fees for the first time since 2001, and that means it would add about $135 million to the budgets of the DOJ and FTC. It would split that $135 million between the two agencies, presumably, and it would give them the resources they need to do things like take on more cases.

    So in defending the bill back in 2019 when the senators introduced this, they said, why should a $900 million deal -- why should the filing fee for that be the same as the fee for a $60 billion deal? That doesn't make any sense. As I said, this bill has gained some traction in Congress, and I wouldn't be surprised if this gets the attention that they want and end up on President Biden's desk to be signed into law.

    JULIE-ANNA NEEDHAM: Great. Thanks very much, Esther.


    ESTHER D'AMICO: Thank you.

    JULIE-ANNA NEEDHAM: That was Esther D'Amico speaking to me, Julie-Anna Needham. Thank you for listening to this week's episode of Dealcast, presented by Mergermarket and SS&C Intralinks. Please rate, review, and subscribe to the podcast. You can find us on Apple Podcasts, Spotify, or look out for your Mergermarket news alert. For more information, check out our show notes. Join us next week for another episode.

    5 March 2021