A $63 Billion Week in Deals Cleared

I've heard this complain a lot from the business community that in the previous administration, a deal would enter the FTC and it would sort of disappear, and sometimes it could disappear for months while, you know, novel ideas were floated, different theories, and sometimes it sort of seemed like the FTC was hoping that deals would die on the vine while they waited for regulatory clearance. I want nothing to do with that.

of June. The FTC cleared candymaker mars thirty six billion dollar acquisition of pringles maker Keleinova, It approved Omnicom's thirteen point five billion dollar buyout of rival inter Public, which will create the world's largest advertising agency, and the Department of Justice cleared Hewlett Packard's fourteen billion dollar acquisition of Juniper Networks. More than sixty three billion dollars in deals

cleared in the same week. Who better to explain what's happening with the anti trust regulators than my guest, Harry First, a professor at NYU Law School who specializes in anti trust. Harry, the FTC and the Justice Department cleared three deals worth more than sixty three billion dollars in the last week of What does this tell you? Is it the change in management?

they've kept them going. They haven't dismissed anything. They're litigating them just like they were before, in fact, emphasizing the continuity of the position of departments taking in some ways maybe not surprising given sort of the maybe populism streak in the Trump administration, but in some way surprising because you know, they have moved closer and closer to put up or shut up. You know, you have to remedy

these things. So that's where we are with those. The other side was the mergers, and out of the box, they filed the case HP's acquisition of Juniper Networks, and it was the first case they filed, and it looked like a Biden complaint. I think people were saying, look, what they're going to do is they'll they'll pull the merger guidelines that were issued in twenty twenty three by the Biden FTC and Justice Department widely viewed as pretty

aggressive in terms of enforcement. Yeah, maybe they're going to pull those and pull back from merger enforcement. But what we saw in that first case was they file the case, they cite the twenty twenty three guidelines, they follow them, They say, hey, this case is presumptively bad because it increases concentration, and you know, they're trying to suppress a more innovative firm. WHOA. That seems to me surprising, So

I thought, well, maybe it's something in the changeover. The person has signed it, maybe doesn't understand what he's done, or who knows. You know, we're not well supervised. But they kept it going. And so the next question is, well, what are they going to do with these cases? And you're right now we're seeing a string of dismissals.

clear how that's going to affect competition. Remember, they pleaded that this was highly concentrated industry, anti competitive, strong head to head competition between the two firms. What's the other part. The other part is a compulsory license to the software that Juniper has called missed. Now, a compulsory license means actually the merge firm gets to keep it. They don't have to get rid of it, they don't have to

divest it. All they have to do is license it, for which they'll get some money, but non exclusively, so they get to keep it. And then do they have a potential licensee for this, No, they don't seem to have anyone. They are going to appoint a trustee. So who's going to take this license? Is as valuable? Isn't it not explained? And they say maybe a second party will show up. Well, a second party shows up, says the decree with a bid of over eight million dollars,

they can have a license to eight million dollars. Might be a second bid. Remember this acquisition is a fourteen billion dollars acquisitions. So is a non exclusive life sense to this software valuable? Will someone come up and take it? Who might it be? No idea? So that's where we are. Looks to me like we can call it, shall we say, a really weak remedy for a case that's pleaded that look very strong. So this is your insight into where merger enforcement might be going. The first case out of

the box looks strong when it's pleaded. Looks to me at the moment, Hey, maybe more information will turn up pretty weak on the remedy that they go forward to allow the merger to go forward. And this seems to be the mantra that, you know, we've got these strong guidelines on the books that look very pro enforcement. Maybe we'll file a case and then have a weak remedy. Or here's another good part, maybe we won't file a case at all and just let these things go through.

But interestingly, they filed something that's called a closing statement explaining why they closed the case. This is pretty rare for the Justice Department to do or the FTC. They don't usually explain why they don't do something, and there's a lot of controversy about this, but this one they explained. And I urge people to go and read it because it's sort of funny. It's like, I think of you remember the old Chinese fortune cookies.

the company. The Justice Department understood the unmet needs of customers. Okay, this is the company that's going to be acquired, the company that understood the un met needs of customers, right, and they called their customers farm town, frugal and heartland families. All right, it's just great. And these in some ways would sound like you know, JD. Vans wrote this, and they are the consumers you would think this administration purports

to want to protect. And instead what they're going to be allowed to do is to join the Sprint network, which presumably they decide not to do in the first place when they signed up with US Cellular. And then it goes on to lament the concentration in the cell phone market. It's a big three and we don't seem, you know, to be doing anything about this, we the Justice Department. It is truly a curious document. Final curious point on this Sprint T Mobile merger was supposed to

establish a fourth carrier, you know, through Dish. So Sprint had to give Boost Mobile system to Dish to help them stay I was a fourth carrier. No hint in this statement that there's a fourth carrier that might emerge, even though the Just Department is at this very moment supervising the decree that they entered that purported to establish or hope to establish a fourth carrier. So this is curious,

bizarre prisoner in the Fortune Cookie factory material. But again it's sort of this why we see these problems, But hey, I don't think we're going to do anything about it.

many of these deals turned out to be ineffective. There were studies of this that you know, you'd say, oh boy, this will re establish competition in the market, and then it didn't. And so what happened that people basically went forward and we lost competition. You know, every once in a while to be some good remedy. But basically the argument was, you know, it's really hard to create competition through these government decrees. The better thing is not to

let competition go away by allowing the merger. So, you know, that was the basis of the policy in the Justice Department, the FTC. Not that they didn't settle cases. They didn't, and not all of them were actually effective. They weren't, but the overall thrust was we're doing we're not settling, And then parties were put together deals knowing that there

was a greater chance of litigation. Now it's gone the other way, and you know, I think that this is what a deal making the administration would want, And it looks to me like that's where they're going always with the ability to bring suit in a case that suits them, because the twenty twenty frequentidelines have a lot of discretion in them, and the flip side of we'll negotiate a lot is but maybe not with you. So we have yet to see with whom they are tough.

people in both agencies. People generally credit Gail Slater as being, you know, a real anti trust person, not a hack anti trust person, you know, but in the end, they really do serve in this administration very much. I think it's the will of those above them. Certainly that's true for Andrew Ferguson, or at least how he perceives it.

And you know, maybe just some extent to Gail Slater, but maybe this closing statement was the best she could do to get her voice on the record that this is a bad merger that should have been blocked.

before he was appointed. And as you read what he writes, it's, you know, very pro Trump. I mean, he came out in favor of firing his Democratic colleagues on the Federal Trade Commission. Really, why why does he do that? He's saying, okay, and don't forget President, you can fire me too. Why did you do that?

you know, have to follow that tune. But she may have more ability to maneuver, or maybe more willing to. I just don't know, Harry.

things that looked like that FTC not so much. Apparently Trump threatened to fire the chair a couple of times. So I think there was more independence, more if you could call it that normalcy, and the ags were more normal. I mean, Bill Barr was, for whatever you think of him one way or the other. You know, he was a sort of a normal lawyer and you know, not a sick ephant to the president. So it was a

different time, it was things were done differently. I think this administration, from all you can see, everything is just different.

or left resigned. You know, staff knows what they're in for. They've got new bosses.

plaintiff is a group called Children's Health Defense. So Children's Health Defense is an anti vaxed group that had been run by RFK Junior, and they filed private suit against let's see Washington Post, Reuter's ap claiming that they've been feeding information or agreeing and information and feeding it to the platforms like Facebook so that these groups would be

deep platformed for misinformation. And the information apparently centers around the idea that COVID vaccines were terrible COVID you know, all the COVID conspiracy. It's an odd group of plaintiffs, an odd piece of litigation because it's hard to see what the anti trust injury is what you know, where competition has been affected. But the Justice Department just thought

us statement of interest on the plaintiff side. And you know, you look at all the things that the Justice Department could do, and you say, so, why did you do that in a case that I mean, I would say in any trust case if it's marginal, that's sort of

a nice thing to call it. And part of the problem that the Justice Department has in this statement of interest is if you credit their theory a little bit too much, they could cast a pall on what are called standard setting organizations that help standardize interfaces in computers, telecommunications, all sorts of technical things, because that involves sort of

similar behavior, except that as real economic consequences. So the paper that they filed is to my reading, sort of odd because they've got to make it a real legal brief. On the other hand, you know, they talk about the marketplace of ideas and discrimination and quote Clarence Thomas. So this is an interesting case to watch because again, you know, what are they doing by weighing in on this case.

There's a lot of work to do, and you know, usually private plane ifs are left to pursue private cases, they get treble damages if they win. But here just the department feels the need to weigh in and say this might be.

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