If the Democrats take the White House, will the antitrust climate change?
WASHINGTON: 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.
The head of the U.S. Federal Trade Commission, Deborah Majoras, has already said she will depart this month. The FTC and the Justice Department combine efforts to enforce antitrust law.
Phillip Zane, who specializes in antitrust matters for the law firm Baker Donelson, said that a Democratic administration was likely to take a tougher line on merger reviews than the Bush team.
“If I had any sort of close deal, Id rather have it go now,” Zane said. “It may be that some of the airline deals are close deals.”
Record fuel prices and a weakening economy are pressing large U.S. airlines to consider consolidation. Last week, pilots at Delta Air Lines and Northwest Airlines revived conversations on merging their contracts, a crucial step if the carriers are to proceed with merger talks.
A big airline merger would get antitrust scrutiny but could be hard for regulators to challenge, said Evan Stewart, an antitrust attorney for the law firm Zuckerman Spaeder.
“The profit margin is just so horrible, the cost of oil and other things, the union cost,” Stewart said. “Some of these companies are in such terrible shape.”
Antitrust experts disagreed about whether Microsofts interest in taking over Yahoo would be a close call for regulators.
Zane said that Republicans and Democrats would probably have a similar view of a Microsoft takeover of Yahoo 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 - thats one thats more likely to have a political overtone to it,” he said.
The last time a Democrat was in the White House, the Clinton administration accused Microsoft of abusing its dominance of the market for computer operating systems.
The FTC under President George W. Bush has thus far declined to go after Intel, which Europe accused of trying to squeeze out its main rival, Advanced Micro Devices. However, Andrew Cuomo, the New York state attorney general and a Democrat, has started an investigation about Intels monopoly power.
Daniel Booker, an antitrust attorney for the law firm Reed Smith, had a different concern. “Thats a transaction that, rather than being worried about approved or not approved, Id be worried that I wouldnt be able to get a decision.”
Thats because senior regulators often leave as a change in administration approaches, slowing down decision-making. Majoras, the FTC chief, 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.
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.
McDonald said there “may be some difference, but that difference, if much at all, will manifest itself in the marginal case.”
While regulators publicly insist that they press cases that should be litigated, they have lost major painful court fights.
“To some degree you have to take that into account,” said Andrew Gavil, who teaches antitrust law at Howard University. “Its easy to say you should bring more cases, but its also easy to say, Bang your head against the wall. “
