New York (November 17, 2016, 11:28 AM EST) -- President-elect Donald Trump's campaign has addressed the topic of antitrust enforcement in several specific instances and has expressed a willingness to investigate mergers in concentrated industries and companies he sees as having too much market power; however, President-elect Trump has not outlined a formal antitrust policy agenda. He has campaigned in part on the notion that the economy is "rigged" but has not made clear if or how that view may affect antitrust enforcement more broadly.
Therefore, it is difficult to extrapolate from these limited data points whether the Trump administration will follow a more traditional Republican approach, which in recent years has been somewhat less enforcement-oriented than the approach of recent Democratic administrations, or whether perhaps it will be more enforcement-minded in general, or just with regard to certain industries, such as the media. It is noteworthy, however, that the campaign has announced that former George Mason University professor (and former Republican Federal Trade Commissioner) Joshua Wright will be leading the transition team effort for the Federal Trade Commission. Professor Wright is a well-known and experienced antitrust economist and attorney, and his involvement suggests that the administration may be at least considering a more traditional Republican approach to antitrust.
No matter what the overall approach, it is important to keep in mind that there are institutional limitations with regard to the magnitude of any shift in enforcement policy. The antitrust agencies are not regulatory agencies — they are law enforcement agencies, and their actions are eventually reviewed by federal courts. The U.S. Department of Justice cannot "block" a transaction — it can only challenge it, in court, though the threat of a court challenge is often all that's needed to derail a proposed combination. The FTC is an administrative agency and thus can seek to litigate against transactions or unilateral conduct within the FTC administrative process (and the FTC does have some additional flexibility based on its authority under Section 5 of the FTC Act), but those decisions, too, are eventually subject to federal court review.
In this context, the Trump administration can more easily step back than step forward — i.e., less aggressive agency enforcement policy can allow more deals and more conduct to go unchallenged, and in that sense if the administration desires a less aggressive enforcement policy it can be implemented. A more aggressive policy also can be implemented — certainly more aggressive enforcement by the agencies can (and does) change the risk calculus for potential deals and can extend the time needed for deals to be consummated — and the approach of the agencies is a very significant issue that can change the economics associated with a deal. But such an approach has its limits. Antitrust agencies cannot, merely by virtue of more aggressive review, whether in general or within a particular industry, fundamentally rewrite the antitrust laws; the agencies need to win in court to make fundamental changes in the way the antitrust laws are applied. Of course, this does sometimes happen (e.g., F.T.C. v. Actavis Inc.), and it is more likely to happen if the agencies are very aggressive in their enforcement efforts, but merely planning to be aggressive does not in and of itself dictate a change in legal outcomes.
Department of Justice
President-elect Trump campaigned aggressively against those he considers to be "Washington insiders," so his administration may be reluctant to appoint someone with previous high-level agency experience to lead the DOJ Antitrust Division. However, as noted above, the selection of Professor Wright to lead the FTC transition team may indicate that the administration is open to considering more traditional candidates.
Federal Trade Commission
The FTC finds itself in an unusual situation, because only three of five commissioners — Chairwoman Edith Ramirez and Commissioners Terrell McSweeny and Maureen K. Ohlhausen — are currently serving. Once President-elect Trump takes office, he would presumably name Commissioner Ohlhausen, the only current Republican commissioner, as acting chairwoman and Chairwoman Ramirez would revert to being a commissioner. (Whomever is chosen by the administration to be the permanent chair would need to be confirmed for that position; thus, even if Commissioner Ohlhausen is selected, she could only be acting chairwoman in the interim.) This would create an odd situation where the acting chairwoman is a Republican appointee but the Democratic appointees constitute a majority on the commission. The commission can function this way — under FTC rules, a majority of the members of the commission (1) in office and (2) not recused from participating in a matter constitutes a quorum for the transaction of business in that matter. So the FTC will be able to conduct business and take enforcement actions on 2-1 votes or even on 2-0 votes, in instances where one commissioner is recused. But the acting chairwoman will be in the minority. Even if current Chairwoman Ramirez were to leave, which she is generally expected to do, Commissioner McSweeny would still maintain an effective veto because the commission would have only two commissioners. This would leave the Republican president with either a commission controlled by Democrats or a commission that can easily be deadlocked. The Trump administration will likely prioritize nominations for the open commission seats in order to regain control of the commission as quickly as possible. With a Republican Senate, that will likely be completed swiftly.
Rep. Tom Marino, R-Pa., is expected to continue to chair the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law. This will be Rep. Marino's second term as the subcommittee chair. Rep. Hank Johnson, D-Ga., who has been ranking member of the subcommittee since 2013, also should retain his post.
Sen Mike Lee, R-Utah, is likely to have his second term as chair of the subcommittee, and Sen. Amy Klobuchar, D-Minn., should remain subcommittee ranking member.
With the national attention given to dramatic increases in the price of drugs in recent years, antitrust policy is expected to continue to focus on ways to increase competition in the health care and pharmaceutical marketplace. Both the House and the Senate committees, as well as President-elect Trump, have addressed the rising cost of drugs. The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law has examined the role of pharmacy benefit managers and health insurance companies and consolidation in those sectors, and can be expected to continue oversight on mergers and potentially anti-competitive actions that have an impact on the cost of health care. As part of his health care plan, President-elect Trump also has indicated support for repeal of the McCarran-Ferguson Act, which currently provides insurance companies with a certain degree of exemption from federal antitrust laws.
Separately, the Republican leaders on the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law have expressed concern regarding the discrepancy between the litigation process and standards applied to FTC litigation versus the standards applied to DOJ antitrust enforcement. In 2016, the House passed the Standard Merger and Acquisition Reviews Through Equal Rules Act (H.R. 2745), which seeks to standardize the process by which the FTC and the DOJ pursue action against proposed mergers, and this topic could remain a priority for the Republican-led House and Senate subcommittees. Another topic that could receive greater attention is international antitrust, with the subcommittees focusing on China's antitrust policies and their impact on U.S. markets.
This article originally appeared in Law360.