Democratic vice presidential nominee Tim Kaine told Meet The Press on Sunday that “less concentration is generally helpful, especially in media,” suggesting a skeptical view of AT&T’s proposed takeover of Time Warner.
And that may have been the best political news the merger got this weekend.
Donald Trump’s top economic adviser, Peter Navarro, put out a long statement condemning the proposed deal, explaining that “the very corporations that have gained from shipping America’s factories and jobs offshore are the very same media conglomerates now pushing Hillary Clinton’s agenda.” Consequently, a Trump administration would not only block the merger but also “break up the new media conglomerate oligopolies that have gained enormous control over our information, intrude into our personal lives, and in this election, are attempting to unduly influence America’s political process.”
Meanwhile, Amy Klobuchar, the ranking Democrat on the Senate’s antitrust subcommittee, released a joint statement with Utah Republican Mike Lee, one of the most anti-Trump members of the Senate, calling for hearings on the matter.
The good news for AT&T CEO Randall Stephenson is that antitrust enforcement is not, in practice, as politicized as many people seem to think. In the past, regulators have allowed broadly similar mergers to go forward, albeit with conditions attached that undermine their main business rationale. But one reason antitrust enforcement has not been particularly politicized is that it hasn’t been a major point of political emphasis. That’s been changing rather rapidly this year, as Massachusetts Sen. Elizabeth Warren has begun to champion a school of thought that says lack of competition is playing a crucial role in America’s slow growth and reduced pace of investment.
Conduct remedies are going out of style
The government has two ways to respond to a proposed merge that it thinks may harm competition in certain sectors of the economy — it can seek to block the merger entirely, or it can seek concessions from the merging firms.
Sometimes these concessions are very straightforward. A given merger between two industrial conglomerates might be deemed fine for competition, except in the specific case of the sprocket industry, where combining both companies’ sprocket divisions would create a dominant sprocket maker. The government could then require that one or both of the sprocket divisions be spun off or sold to other companies as part of the merger. When US Airways and American Airlines merged, for example, the Department of Transportation decided that they would be excessively dominant at Ronald Reagan National Airport and required the combined entity to give up some of its landing slots to competing airlines.
But the government can also enter a murkier sort of ground where it requires the merging companies to make promises about how the business will be run.
The clearest precedent for the AT&T/Time Warner merger, Comcast’s takeover of NBC Universal (which is an investor in Vox Media), heavily featured these kinds of conduct remedies — Comcast promised not to use its cable infrastructure to give favorable treatment to NBC Universal content.
This has proven, in practice, difficult to enforce. Bloomberg TV, for example, has repeatedly complained about discriminatory treatment in which its business news channel will be exiled to a distant and illogical corner of the channel guide while Comcast’s own CNBC property is nestled in with other news networks. Asking regulators to constantly police this sort of conduct is difficult, and a growing chorus of voices on the left says that the government should simply block mergers that require this kind of elaborate enforcement.
Elizabeth Warren has made antitrust enforcement a priority
In a July speech that marked the return of competition policy to the political spotlight, Warren specifically targeted conditional approvals as a problem. She argued that “they just don’t work,” either in theory or in practice. Her most concrete proposal for a policy shift relative to the Obama years was to give up these remedies, and say instead that “where a merger raises fundamental antitrust concerns, regulators need to stand tall and say no.”
Clinton, meanwhile, has been trying to use the issue of competition policy as a possible bridge to the populist left for a while now. Way back in October 2015 she wrote a column for Quartz promising that as president she “will prevent concentration in the first place by beefing up the antitrust enforcement arms of the Department of Justice and the Federal Trade Commission.”
A fact sheet on competition policy Clinton’s campaign put out in early October even more closely aligns Clinton with Warren’s view on a number of fronts.
The fact sheet promised that “in contrast to the highly permissive approach of the Reagan era, [Clinton] believes we should make sure that mergers and acquisitions do not excessively concentrate market power, and undermine consumers, suppliers, workers, and small businesses through higher prices, reduced choice, and other harms.” That can sound a little like boilerplate, but the reference to a broad range of stakeholders beyond consumers — plus the specific negatively inflected callout of Ronald Reagan — suggests a desire to return to the stricter midcentury approach to antitrust enforcement.
It implies, for example, that a Clinton administration might find the AT&T/Time Warner deal to be bad for competition even if it didn’t lead directly to higher prices.
Clinton also specifically promised to “appoint strong enforcement officials at the Department of Justice Antitrust Division and FTC who have demonstrated a willingness to take on anti-competitive behavior,” aligning herself with Warren’s dictum that “personnel is policy” and suggesting that this is an area of her administration where she is comfortable giving wins to the left.
The timing of the deal makes this a key test
The unspoken subtext of a lot of recent talk from the left wing of the Democratic Party about antitrust enforcement is that the Obama administration has been too kind to major high-tech companies, especially Google, which has very close ties to Obama’s White House.
Warren, in particular, has called technology giants out by name, while Clinton has not.
This makes AT&T’s timing on the deal in some ways especially unfortunate in political terms. Clinton has made big but not incredibly specific promises to move in Warren’s direction on antitrust but, all things considered, would probably rather avoid a huge fight with technology companies that are not only rich but very popular with the mass public.
Telecom utilities, by contrast, are generally held in low esteem by the public and make for much softer political targets.
The administration should kill the Time Warner-AT&T merger. This deal would mean higher prices and fewer choices for the American people.— Bernie Sanders (@BernieSanders) October 23, 2016
Going soft on AT&T would be viewed as a major betrayal by populist Democrats specifically on an issue where Clinton has been trying to reach out to them. And given the bipartisan skepticism of the deal, it’s a fairly easy target in political terms.
In general, antitrust enforcement is a fairly technocratic area of the federal government that’s somewhat more shielded from day-to-day politics than most people realize. But a decision to back away from conduct remedies as unworkable is exactly the kind of nontechnical issue where it really is appropriate for elected officials to make their influence felt. And at the moment, all the political winds are blowing in an unfavorable direction for AT&T.