December 6, 2017 / 9:11 PM / 2 years ago

Breakingviews - Trump and Warren make odd antitrust bedfellows

U.S. Senator Elizabeth Warren (D-MA) questions Wells Fargo CEO John Stumpf (not pictured) during his testimony before a Senate Banking Committee hearing on the firm's sales practices on Capitol Hill in Washington, U.S., September 20, 2016. REUTERS/Gary Cameron

WASHINGTON (Reuters Breakingviews) - Donald Trump and Elizabeth Warren make odd antitrust bedfellows. The liberal U.S. senator says mega-deals like Aetna’s $77 billion sale to CVS could kill competition. She also backs the Justice Department’s fight against AT&T-Time Warner and has concerns about past merger remedies. It puts her in the same camp as the president.

She laid out her views on dealmaking in a speech on Wednesday. AT&T’s $85 billion acquisition of Time Warner, she said, would spur higher prices, fewer choices and worse service for consumers. That echoes Trump’s antitrust chief Makan Delrahim and the DOJ’s November lawsuit to block the deal, which asserted the merger would leave millions of television viewers paying more and slow innovations like video streaming.

The Massachusetts lawmaker also said past concession agreements that allowed certain mergers to go forward have been “epic failures.” That almost feels like a hat tip to Delrahim, who in a speech last month said past behavioral remedies to address antitrust concerns have not worked out as planned and have been difficult to enforce. He cited Comcast’s takeover of NBC Universal as an example, adding extra execution risk to vertical mergers in which deal partners don’t directly compete.

His tough stance surprised the corporate sector, which had expected easier deal reviews under the Trump administration. It’s also rare for vertical mergers, like AT&T’s acquisition of Time Warner, to face court challenges since they are usually approved with conditions.

Warren argued that big vertical deals need to be viewed as critically as horizontal mergers and said Aetna’s sale to CVS will be a test for antitrust enforcers. It’s unclear whether the DOJ, which reviews insurance-industry deals, has jurisdiction over the merger or if the Federal Trade Commission, which assesses the pharmaceutical and retail sectors, would handle it.

Warren did admit she was worried about whether the DOJ’s AT&T lawsuit was politically motivated given Trump’s attacks on CNN, which is owned by Time Warner. She also branded Delrahim as someone with a “long record” of backing bad mergers. Still, in rare praise of the Trump administration, Warren said the Justice Department’s move to block the AT&T-Time Warner deal was “a good step.” Such an alliance of convenience puts more pressure on big M&A.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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