Dealmakers wonder if Trump will intervene in mergers

It wasn’t a surprise when Donald Trump took the opportunity during his Jan. 11 press conference to angrily accuse CNN of spreading fake news. Throughout the campaign Trump had complained the cable network was being unfair to him—and at one point vowed that as president, he would block AT&T Inc.’s proposed $85.4 billion merger with CNN’s parent, Time Warner Inc.

It was surprising, though, when AT&T CEO Randall Stephenson turned up at Trump Tower the next day. People familiar with the meeting said beforehand that the CEO and president-elect would discuss the Time Warner deal. Afterward, both AT&T and Trump aides said the topic didn’t come up and the two just talked about job creation.

Even so, a closed-door meeting between Trump and Stephenson set off alarms inside the U.S. Justice Department, which is currently reviewing the merger to make sure it won’t violate monopoly laws by creating too much media concentration.

The attorneys in the department’s antitrust division are usually given a wide berth to render an independent judgment based on the merits and the law—free even from the appearance of political pressure from above.

Waller

“It is highly unusual for a president or president-elect to meet with a CEO who has a pending merger under review,” said Spencer Weber Waller, a law professor at Loyola University Chicago and a former Justice Department attorney.

There has always been a delicate balance between the Justice Department and the president. He appoints its leaders but isn’t supposed to get in the way of its work to preserve public confidence that their decisions aren’t influenced by politics, lobbying or the whims of the president.

Former enforcers at the antitrust division say tensions with the White House over merger reviews are virtually unheard of. Justice Department lawyers are worried about whether the new administration will honor their independence, said a person familiar with the department’s thinking.

At least once in the past, a president did intervene in a merger decision.

In “The Passage of Power,” author Robert Caro recounted how Lyndon Johnson used a pending Houston bank merger to obtain a written promise that the Houston Chronicle, which had been critical of him, would support him while he was in office. The newspaper’s president was also the president of one of the banks involved in the merger. Johnson got the letter of support he sought. The deal was approved, Caro wrote.

It wouldn’t be illegal for a president to ask the attorney general to find a way to block a deal, as long as it’s done within the bounds of antitrust laws.

Any intervention would raise questions about whether the decision was made for political or personal gain, said Jonathan Baker, a law professor at American University and former director of the U.S. Federal Trade Commission’s economics bureau under a Democratic administration. Decisions made for political reasons can weaken the economy if antitrust procedures are used to squelch competitors, Baker said.

If Trump does want to block the merger, the Justice Department could sue to stop the transaction. But to succeed it would have to persuade a judge that the deal would threaten competition. That could be tough in the AT&T case because the company isn’t buying a direct competitor.

Since his election, Trump has also met with executives from Bayer AG and Monsanto Co., which are awaiting Justice Department approval of their proposed $66 billion merger.

That deal, which would create a seed and chemicals giant, has raised concerns about reduced choice for farmers. The Jan. 11 meeting between Trump and the companies’ CEOs covered the deal as part of a conversation about the future of agriculture and the need for innovation.

The talk was “productive,” Monsanto said in a statement. Bayer said it is looking forward to working with regulators over a deal it said will unite complementary business and allow the new company to better serve U.S. farmers. Trump hasn’t said whether he favors or opposes that deal.

“There are established procedures here. It’s called due process,” said Claude Barfield, a trade policy scholar at the conservative American Enterprise Institute in Washington. “You ought not to have this kind of ex-parte, random intervention.”

The subject came up in the confirmation hearings for Sen. Jeff Sessions, the president-elect’s nominee for attorney general. He tried to reassure his former colleagues that he would resist any meddling in merger reviews.

“I have no hesitation to enforce antitrust law,” Sessions said during the Jan. 10 hearing.

“I have no hesitation, if the finding justifies it, to say that certain mergers should not occur and there will not be political influence in that process.”•