Diana L. Moss reviews the increasing politicization of antitrust and regulation in the United States and what avenues are available to resist the corruption of due process and usurpation of the rule of law.
When ABC briefly pulled late night show host Jimmy Kimmel off the air last month, the swirl of political coverage focused primarily on the First Amendment implications. Was the Trump White House pressuring broadcasters reliant on government licenses to silence a comedian and television host who relishes criticizing the president? Was an administration with an authoritarian streak making a move toward state-controlled media? The answers to these questions are undoubtedly yes.
But take a deeper look at the fact pattern, and it becomes clear that the Kimmel episode has as much to do with free speech as it does with using antitrust enforcement and regulation to advance the Trump administration’s political goals. This time, the end game is not the eradication of diversity, equity, and inclusion (DEI) programs, which the Federal Communication Commission (FCC) required as a condition for approving the Paramount-Skydance merger. It is also not about taking aim at political viewpoint, which the Federal Trade Commission (FTC) did in extracting a promise from marketing, advertising, and communications companies Omnicom and Interpublic Group (IPG) to refrain from tying advertising spending to (read “conservative”) ideology and viewpoint.
Rather, the Kimmel incident signals the pursuit of another political goal by the Trump administration: promoting state censorship. This time, both the political goal and method of interference are different. Indeed, the Kimmel incident is not about imposing conditions on mergers that have nothing to do with a credible antitrust violation. Rather, it is about the administration capitalizing on, or encouraging, companies to curry favor with the White House to get their mergers approved. In the case of Kimmel, the supplicant was the largest television station owner in the U.S., Nexstar, which is currently pursuing its own merger.
Whether companies agree or disagree with the Trump agenda doesn’t really matter. Their actions have a compounding effect on advancing Trump’s political goals. This is because the private costs of “ingratiation” are far less than the benefits of obtaining favorable merger outcomes. But the costs of backroom deals and the administration’s circumvention of due process and the rule of law—when socialized across the entire enforcement apparatus—will go far in corrupting the very system that protects our markets, competition, and consumers. The pressing public policy question raised by the politicization of government oversight of consolidation raises is simple. If it is a feature and not a bug of the current administration, what are the major levers that can contain the damage?
The role of judicial review
To be sure, many executives never wanted to set up those DEI programs that became the political target in the Paramount-Skydance merger in the first place. And promises to refrain from tying advertising spending to political viewpoint in the Omnicom-IPG merger are relatively easy to make. Why not agree to conditions that have nothing to do with the facts of a merger, in exchange for government approval? The answer is: because the legal risk is relatively low.
Avenues for resisting the corruption of due process at the FCC (or any other federal regulator) are complex. For the FTC, merger settlements are subject to public comment and internal Commission review. But with the Trump administration’s firing of the two Democratic commissioners, leaving only the three Republican commissioners, any opposition to politically motivated settlements will quickly dissipate in the echo chamber of an all-GOP Commission.
The process at the Department of Justice Antitrust Division, however, is different. The major device for restraining the assault on due process and the rule of law is the Antitrust Procedures and Penalties (i.e., “Tunney”) Act. Under the Tunney Act, a court must approve a DOJ consent order as consistent with the public interest. If a remedy in the order does not address the alleged anticompetitive harm, a court can withhold approval.
The U.S. judicial system is well along in adjudicating abuses of executive power under the Trump administration. A test case for whether the courts can discipline the politicization of antitrustis the DOJ’s handling of Hewlett Packard’s acquisition of Juniper Networks. The DOJ moved to block the merger, which created a duopoly with Cisco that controls about 70% of the market for enterprise business local area networks.
A few months later—and after a reported raft of lobbying and political intrigue—the administration announced a deal to approve the merger. The hitch is that the required divestiture of assets have virtually nothing to do with the market at issue in Hewlett Packard-Juniper merger, or the harm flagged by the DOJ. This is a no-no under the Tunney Act. The swift toggle from full-stop injunction to settlement came with internal DOJ pushback and casualties. Trump’s Deputy Assistant Attorney General for antitrust, Gail Slater, publicly bristled at White House interference, and senior DOJ lawyers who disagreed with the mishandling of the case were fired.
Given these irregularities, and the imminent threat to due process and the rule of law that they present, the court’s decision in the Tunney Act proceeding for the Hewlett Packard-Juniper case will be a litmus test for the power of judicial review to resist political interference in antitrust. There is certainly no shortage of material for the court to work with—the DOJ’s consent order drew sharp rebuke in public comments. Nonetheless, the Tunney Act’s history exposes it as a weak tool—even at the best of apolitical times—for ensuring that merger remedies have a strong nexus with the government’s alleged competitive harm. The question is whether the judiciary can revitalize the Tunney Act to fight off the politicization of antitrust.
The power of the markets
To understand the vast implications of the Kimmel incident on the antitrust and regulatory apparatus that oversees consolidation, we need to tell the antitrust backstory. Nexstar, a company that owns more than 200 local television stations across the country, recently proposed to merge with Tegna, which owns just over 60 stations. In markets where a Nexstar and Tegna station compete in providing local television and news, the merger will eliminate vital competition. As a result, advertising rates in concentrated markets could increase; retransmission fees for cable, satellite, and streaming services carrying those stations could rise; and diversity in political, economic, and social viewpoint could decline.
Nexstar recognized that ABC’s persistence in keeping Kimmel on the air was a thorn in Trump’s side. So, seeking to win the president’s favor, Nexstar applied pressure on ABC by prompting some stations to stop airing the Jimmy Kimmel show. Trump’s FCC chair, Brendan Carr, eagerly took the bait, threatening to use the Commission’s purview over television station licenses to enforce political directives on censorship. Fearful of those consequences, ABC pulled Kimmel’s show.
Within a week, however, ABC reinstated Kimmel, followed quickly by Nexstar, which brought ABC back on air. This occurred almost expressly because advertisers, subscribers, and content creators who opposed the late-night host’s cancellation spoke up, threatening more than one bottom line. While most consumers are well familiar with powerful companies, the return of Kimmel and ABC was the ultimate show of market power—this time on the demand side.
While gratifying, pushback from market participants will not always intervene on the side of good public policy. As more Trump administration officials who might maintain well-intentioned ideas about enforcing antitrust and regulatory statutes are deputized to pursue the White House’s political agenda, interference will mount. Market participants will have to make hard decisions about which products and services to boycott. And the fewer choices there are, the more difficult it will be to harness the power of demand to resist the politicization of antitrust and regulation.
Coping with the “new normal”
The new normal for U.S. antitrust and regulation is the heavy hand of the White House in how cases are selected and resolved. Whether this involves extracting conditions that have nothing to do with the facts of the mergers or making 1600 Pennsylvania Avenue the mandatory first stop to get a merge approved makes no difference. These incidents are not just a departure from the norm during Democratic or other Republican administrations. They represent a shift from the patterns that defined the first Trump administration.
Recall that during Trump’s first tour in the White House, the DOJ’s Antitrust Division did a great deal of work in all areas of antitrust: mergers, monopolies, and anticompetitive agreements. The broadcast television markets were no exception. Under Assistant Attorney General Makan Delrahim, for example, the DOJ pursued cases such as challenging an anticompetitive agreement between broadcast television companies to share competitively sensitive information and obtained divestitures in the Gray Television-Raycom Media merger.
For this process to work, the U.S. antitrust agencies and federal sector regulators must maintain their independence from the White House. Now, in the second Trump term, companies may be forced to curry favor with the White House or otherwise satisfy its unrelated demands to get the green light to merge. That’s unheard of in the history of U.S. antitrust enforcement. Thumbing the nose at due process and the rule of law will take a quick toll on the transparency and predictability of antitrust enforcement and regulation. This will harm market participants and competition: the very backbone on which our market system rests in the U.S. Americans will need to decide how invested they are in protecting that system.
Author’s Disclosure: Diana Moss works for the Progressive Policy Institute. PPI is supported by corporations, individuals, and foundations such as the Lumina Foundation, Peterson Foundation, and Arnold Foundation. No funding source influenced the arguments expressed in this article or stands to benefit from them.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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