The Trump administration’s antitrust agenda is butting heads yet again with a now familiar foe for the federal government: U.S. District Court Judge Richard Leon.
Appointed in 2002 by former President George W. Bush, Leon has emerged as a critical voice in challenging the Department of Justice’s decisions to approve or deny mergers between top U.S. companies.
“It seems in Judge Leon’s court, the federal government always loses,” Christopher Sagers, a law professor at Cleveland State University, told the Washington Examiner. “He is bombastic in the courtroom and in his written opinions.”
In 2011, Leon threatened to deny a settlement with the Obama-era Justice Department allowing Comcast to acquire a majority stake in NBCUniversal over concerns with an arbitration-related provision. He eventually approved that deal, but only after the companies agreed to additional reporting requirements.
It was Leon’s recent clearance of the merger between AT&T and Time Warner that elicited the most attention, however. In a 172-page ruling, he blasted the Trump administration’s argument against the deal, stating that the Justice Department’s antitrust division “failed to meet its burden to establish that the proposed ‘transaction is likely to lessen competition substantially.’”
Now, Leon is sending signals that he may once again oppose the antitrust division, this time over a merger that it approved. At a recent hearing to examine CVS Health’s $69 billion takeover of Aetna, Leon warned he would not serve as a rubber-stamp for an agreement made to win Justice Department approval that required Aetna to divest its Medicare Part D business.
“I can’t think of a judge who has been this opposed to the federal government,” said John Newman, assistant professor of law at the University of Memphis. “He really seems like he actually just doesn’t like DOJ“
Leon’s office did not respond to an interview request for this article.
At the heart of the potential challenge is a statute known as the Tunney Act, the 1974 law that requires the courts to review consent decrees from the Justice Department that ensure mergers don’t violate antitrust laws. While the purpose of the examination is to ensure the deal reached is in the public interest, most federal judges approve the measures without much fuss.
One notable exception is Judge Stanley Sporkin’s challenge of a consent decree reached in 1995 between the Justice Department and Microsoft. The U.S. Court of Appeals later chastised Sporkin for overreaching in his authority and removed him from the case, creating a new standard that effectively forced judges into accepting those agreements.
In 2004, Congress — upset with that interpretation of the statute — updated the Tunney Act to strengthen the role of the courts. Despite that revision, most judges continued to see their role in reviewing the consent decrees as a formality and not a substantive requirement, according to Darren Bush, professor of law at the University of Houston.
“It’s an utterly ridiculous interpretation,” he said in a recent interview. “It got traction because certain common-law scholars decided to side with the DOJ on it.”
The potential challenge to the CVS-Aetna deal may test the boundaries of the updated law. Earlier this month, Leon issued a warning that the two companies may need to keep their assets separate and set a date for another hearing on Dec. 18. CVS and Aetna closed the transaction in November and have already begun to merge.
His arguments perplexed legal scholars, particularly after the approval of the more controversial AT&T-Time Warner deal. The Trump administration is appealing that decision, but most insiders expect the companies to prevail.
And while Leon’s scrutiny may elongate the legal battle surrounding the CVS-Aetna merger, most observers say that transaction is likely not facing a significant threat either.
Judge Leon “has no power to rule outside of the scope of the DOJ’s objections, thus he cannot stop the balance of the business integration,” analysts at RBC Capital Markets wrote in a recent note. “We see a delay in a final affirmative ruling for CVS as the realistic worst-case scenario.”
Some experts disagreed, however, and said Leon could also order a preliminary injunction to bar the deal — effectively forcing the parties to unwind any combined assets — and schedule a trial date to examine the merger further.
Should Leon choose to disapprove the consent decree, the case could then be sent to the D.C. Court of Appeals, where a three-judge panel would make a potentially precedent-setting ruling on the court’s ability to intercede under the now bolstered Tunney Act.
