Will Antitrust Change if Democrats Take White House?

By Reuters -  |  Posted 2008-03-11 Email Print this article Print
 
 
 
 
 
 
 

Antitrust lawyers say any controversial corporate deals should be announced soon.

WASHINGTON, March 11 (Reuters) - With Democrats in a strong position to win the White House after eight years of Republican rule, antitrust lawyers say any controversial corporate deals should be announced soon if they hope to get approval before next January.

Even relatively uncontroversial deals may face delays as senior antitrust regulators leave the Bush administration as the election approaches.

Already the head of the U.S. Federal Trade Commission has said she will depart this month. The FTC and Justice Department combine efforts to enforce antitrust law.

Phillip Zane of Baker Donelson PC argued that a Democratic administration was more likely to take a tougher line on merger reviews than the Bush team has during the past seven years.

"If I had any sort of close deal, I'd rather have it go now," Zane said. "It may be that some of the airline deals are close deals."

Record-high fuel prices and a weakening economy are pressuring large U.S. airlines to consider consolidation. Last week, pilots at Delta Air Lines and Northwest Airlines revived talks on merging their contracts, a key step for the carriers to proceed with merger talks.

A big airline merger would get antitrust scrutiny but could be hard for regulators to challenge, said Evan Stewart of Zuckerman Spaeder LLP.

"The profit margin is just so horrible, the cost of oil and other things, the union cost," added Stewart. "Some of these companies are in such terrible shape ... that we're going to have to have some consolidation. That's gonna happen."

CLOSE CALL?

Antitrust experts disagreed over whether Microsoft Corp's interest in taking over Yahoo would be a close call for regulators.

Zane said that Republicans and Democrats would likely have a similar view of a Microsoft takeover of Yahoo, potentially a $41.4 billion deal, because of rapid changes in the Internet search and advertising market.

"Traditional Republicans would have taken a very strong view of privacy but the new breed of Republicans (are less concerned)," Zane said.

But Stewart disagreed. "Yahoo-Microsoft, that's one that's more likely to have a political overtone to it," he said.

The last time a Democrat was in the White House, the Clinton administration went after Microsoft for abusing its dominance of the market for computer operating systems.

President George W. Bush's Federal Trade Commission has thus far declined to go after Intel, which Europe accused of trying to squeeze out its main rival, Advanced Micro Devices Inc. However, the New York state attorney general, a Democrat, has launched an investigation about Intel's monopoly power.

Daniel Booker of the law firm Reed Smith had a different concern. "That's a transaction that ... rather than being worried about approved or not approved, I'd be worried that I wouldn't be able to get a decision."

That's because senior regulators often leave as a change in administration approaches, slowing down decision-making. FTC Chairman Deborah Majoras has said she would leave in late March to join Procter & Gamble as general counsel in June.

A new administration will take office in January 2009.

WHO IS TOUGHER?

While the pace of deal-making has slowed because of the credit crunch, Bruce McDonald, a lawyer with the Jones Day law firm and a former Justice Department deputy assistant attorney general for antitrust during the current administration, said Democratic and Republican antitrust regulators would come to the same conclusion about the vast majority of mergers.

"There ... may be some difference but that difference, if much at all, will manifest itself in the marginal case," McDonald said.

President George W. Bush's administration has been accused by some critics of being less rigorous in enforcing antitrust law.

It approved, for example, Whirlpool Corp's 2006 acquisition of Maytag Corp, despite estimates the two companies made about 70 percent of U.S. washers and dryers.

But even if a Democratic administration wanted to challenge more mergers, it might lose the fight in court.

"If you went back 30 years, what you would see is a fairly linear movement across administrations of less enforcement and a fairly linear movement of more hostile courts," said Andrew Gavil, who teaches antitrust law at Howard University.

While regulators publicly insist that they press cases that should be litigated, they have lost major painful court fights.

Bush's Justice Department failed to prevent Oracle from acquiring PeopleSoft Inc, while the FTC failed to stop a merger of grocers Whole Foods Market Inc and Wild Oats.

"To some degree you have to take that into account," said Gavil. "It's easy to say you should bring more cases but it's also easy to say, 'Bang your head against the wall.'"

(Editing by Brian Moss)

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