FX168 Financial News Agency (North America) News Business circles expect mergers and acquisitions to relax under President Donald Trump's leadership. If history can be a guide, this may come as a surprise to many.
Judging by the number of merger enforcement challenges from the Department of Justice and the Federal Trade Commission, Trump's first term in office can be said to have been just as tough on corporate mergers as President Joe Biden's term.
According to annual reports released by these institutions, between the 2017 fiscal year and the 2019 fiscal year (roughly equivalent to the first three years of Trump's administration), the Department of Justice and the Federal Trade Commission made 118 such challenges.
This cumulative total is higher than the 108 challenges brought forth between the 2021 fiscal year and the 2023 fiscal year (roughly equivalent to the first three years of Biden's administration).
However, Biden did achieve the highest single-year total of 50 challenges in the 2022 fiscal year - the largest annual total in over two decades.
"While we can expect the new Trump administration to significantly relax regulations, we should not expect this laissez-faire attitude to extend to the antitrust field," said Danny Karon, a member of the Consumer Antitrust Research Institute and Advisory Committee at the University of Chicago Law School.
Justin Stewart-Teitelbaum, partner at Freshfields law firm and antitrust expert, expects the Trump-Wans government to continue merger reviews at a pace similar to Trump's first term, but with a focus on negotiated solutions rather than litigation.
"Given Trump and (Vice President-elect JD) Wans' acceptance of populist themes, we expect the scrutiny of mergers to continue, although this is not inherent skepticism towards merger activities," Stewart-Teitelbaum added, noting his expectation that the new administration will encourage divestitures and prevent job cuts after acquisitions.
Most observers do expect the new government to dismiss Lina Khan, the Federal Trade Commission chair appointed by Biden, who has challenged several high-profile company mergers and become a public adversary of major companies in the USA during her tenure as the Federal Trade Commission chair.
Karon said, Trump "definitely will" dismiss Khan.
But the new chair of the Federal Trade Commission may not necessarily oppose the government's several major tech antitrust cases against Google, apple, amazon, and Meta.
"Some of these cases were initiated during Trump's first term; besides, he is also not a fan of Facebook," Karon said about Trump.
There may be some early signs next month regarding the inclination of the Trump administration based on who will get the senior positions at the Federal Trade Commission and the Justice Department's antitrust division.
One person involved in these decisions is antitrust technology lawyer Gail Slater, who is Vice President Pence's assistant-elect. According to Bloomberg, she is advising Trump's transition team on the successor to Khan.
Candidates being considered for senior positions include antitrust lawyer Alex Okuliar, who was involved in the Justice Department's preliminary investigation into Google, which led to a lawsuit against this online search giant during Trump's first term. Okuliar previously served as the Deputy Assistant Attorney General for the antitrust division in the department.
Second request.
Another way to measure the enthusiasm for mergers and acquisitions in the next government is the number of "second requests" issued by the Department of Justice and the Federal Trade Commission to companies seeking to merge.
The so-called second requests are important because they allow regulatory agencies to conduct a more in-depth investigation into proposed mergers or acquisitions if concerns arise about competition, potentially leading to formal merger challenges.
Second requests are seen as a burden and often hinder merger activities as they cause delays and incur associated costs.
According to financial consulting group Cornerstone Research, after Biden took a series of enforcement actions in 2022, such second requests did indeed decrease.
Cornerstone attributes this decline to a decrease in actions taken by the Department of Justice, which issued 11 second requests in the 2023 fiscal year, with much of the time spent on prosecuting more high-profile antitrust cases.
Cornerstone stated in a report: "This is half of the previous year and the lowest figure in the past 20 years."
Percentage-wise, second requests were also more common in the first three years of the Trump administration, occurring in 2.6% to 3.0% of the reported mergers. During the Biden administration, second requests accounted for 1.9% to 2.1% of the reported transactions.
In the years roughly corresponding to the first three years of the Trump administration, a total of 157 second requests were issued. In the years roughly corresponding to the first three years of the Biden administration, a total of 149 second requests were issued.
Encircle Google.
Both the Trump and Biden administrations actively challenge the company's position on competition issues, accusing it of monopoly behavior.
In fact, this is the first time the Trump administration has sued Google for antitrust, citing Section 2 of the Sherman Antitrust Act of 1890.
The Biden administration took over the case, leading the district court judge to rule in August that the tech giant illegally monopolized the search engine market.
Since the Department of Justice under former President Bill Clinton sued Microsoft in 1998, the Section 2 lawsuit has been in a state of stagnation.
This is also the first time the Trump administration has tried to block AT&T's merger with Time Warner, reverse Meta's acquisition of Instagram and WhatsApp, and investigate Apple, leading the Biden administration to sue the iPhone maker earlier this year.
However, Biden's Department of Justice and the Federal Trade Commission have further extended Section 2.
The Department of Justice has brought a second antitrust lawsuit against Google for its online advertising technology, and continues to sue Live Nation and Visa (V). The Federal Trade Commission has made similar accusations against Amazon.
"Irrational prosperity"
No one can guarantee that Trump's second government will be as radical as the first.
The business community is looking forward to some relief. In the days following Trump's victory, the stock prices of some companies currently facing antitrust or merger challenges have risen, with people predicting a better corporate trading environment.
There are good reasons for this. Trump has promised business-friendly policies, such as lifting heavy regulations, lowering corporate tax rates, and dismissing Gary Gensler, the chairman of the U.S. Securities and Exchange Commission, who is skeptical of cryptos.
After Trump's victory, several large technology company CEOs, including Tim Cook of apple, publicly and privately praised him.
However, investors expecting different outcomes when reviewing corporate collaborations may be in for a surprise.
Antitrust lawyer Mark Wagoner said, "Some views on the stock market trends - we have heard of a new antitrust world - I think, this may be some irrational fervor."