The head of the Department of Justice’s Antitrust Division on Thursday signaled a change in approach to antitrust under his leadership by asking companies to divest assets when necessary in order for major merger deals to be approved.
That’s a shift from the Obama administration, which leaned more heavily on consent decrees that asked merged companies to cease antitrust behavior, but without ensuring compliance through divestment.
“I expect to cut back on the number of long-term consent decrees we have in place and to return to the preferred focus on structural relief to remedy mergers that violate the law and harm consumers,” Makan Delrahim said Thursday to the American Bar Association’s fall conference in Washington.
A consent decree is considered a behavioral remedy, a pledge by the merging companies to avoid anti-trust behavior by adhering to certain best practices.
Under Obama, the division leaned on behavioral remedies, as evident in major merger cases such as Ticketmaster and Live Nation in 2010 and Comcast and NBCU in 2011. Examples of behavioral remedies in those cases included licensing, non-discrimination requirements, and firewalls.
Behavioral remedies are hard to enforce, but structural remedies — the divesting of assets by the merging companies — are more likely to ensure compliance, Delrahim said.
Delrahim’s remarks were made just days after reports surfaced that the Trump administration was pushing Time Warner to sell off Turner Broadcasting, the parent company of CNN, as a condition of merging with AT&T.
The Justice Department rejected that report, and said AT&T and Time Warner came up with the proposal to sell CNN’s parent company, which the department rejected. But AT&T has disputed the Justice Department’s claims, and talks are still ongoing.
Delrahim didn’t specifically mention that proposed deal in his Thursday remarks. But he did cite the Entercom-CBS merger, which employed a structural remedy, as an example of a successful merger.
Entercom divested 13 radio stations as part of its deal with the Justice Department. The merger would give Entercom 235 stations nationwide, although it still has to be approved by the FCC.
“Like any regulatory scheme, behavioral remedies require centralized decisions instead of a free market process,” he said. “They also set static rules devoid of the dynamic realities of the market.”
“With limited information, how can antitrust lawyers hope to write rules that distort competitive incentives just enough to undo the damage done by a merger, for years to come?” he asked. “I don’t think I’m smart enough to do that.”
