Biden’s antitrust push working to block deals
The Biden administration’s strategy of leaning on industry regulators to block deals that might be tricky for the Justice Department to challenge in court is working.
In the past month alone, telecom and airline regulators have moved to nix Standard General’s deal to buy broadcaster Tegna and JetBlue’s acquisition of Spirit Airlines.
Meanwhile, federal railroad officials on Wednesday imposed conditions on Canadian Pacific Railways’ $27 billion takeover of Kansas City Southern — falling short of the Justice Department’s push to block the deal, but taking what they said were “unprecedented” steps to ensure the railroads abide by promises made during the merger review.
Those moves are proof that President Joe Biden’s July 2021 executive order urging a “whole of government” approach to competition is taking effect, said Tim Wu, one of the authors of the sweeping order. For decades, the Justice Department and Federal Trade Commission have taken the lead on competition issues and reviewing most mergers. But the executive order specifically called on industry regulators to engage in “independent oversight of mergers, acquisitions, and joint ventures.”
“The overall aim of having agencies be much more active in their joint merger reviews was plain in the text and in our thinking,” said Wu, who left the White House in December to return to Columbia Law School. “The White House is not saying ‘block this merger’ but ‘you have these powers and this is what the administration stands for.’”
Many federal regulators have the authority to review whether deals are in the “public interest,” which can include issues related to employment, public safety and security, or network reliability, said Diana Moss, president of advocacy group American Antitrust Institute. That standard is broader than the Justice Department and FTC’s mandate to examine whether transactions harm competition, she said.
The Federal Communications Commission has long been active in mergers involving telecommunications and broadcasting, working in concert with the Justice Department.
On Feb. 24, the Federal Communications Commission sent private equity firm Standard General’s proposed deal to buy Tegna to an administrative hearing — a step that usually kills acquisitions since the lengthy proceeding often extends a final decision beyond the merger’s timeline. Standard General hasn’t yet given up on the takeover and has threatened legal action, though its financing on the Tegna deal expires on May 22.
The decision marked one of the first times the agency moved against a deal without antitrust authorities also opposing, and the first time FCC challenged a merger of such size through a bureau action. Normally the agency’s five commissioners vote on sizable mergers.
But other regulators, such as the Department of Transportation, have been less active on the merger front, deferring to the Justice Department on whether to block a proposed transaction.
Last week, the agency announced a shift — denying JetBlue and Spirit’s request to operate as a single airline and moving forward with a public interest proceeding on the matter. The Justice Department simultaneously filed an antitrust lawsuit challenging the deal in Massachusetts federal court.
The DOT action represented the first time in decades the regulator used its authority to block the transfer of a certificate — the formal federal approval to operate aircraft and carry passengers.
Transportation Secretary Pete Buttigieg said the agency will hold off on deciding on the certificate transfer request while the DOJ lawsuit makes it way through court.
“We’re looking at everything we can do,” Buttigieg said in a Monday interview with Bloomberg. “We can’t put the toothpaste back into the tube in terms of what’s played out over the last decades, but we do need to hold the line when things are happening on our watch.”