Indicators of Barr’s views on antitrust enforcement
Barr’s antitrust experience is not limited to his tenure as the U.S. Attorney General. Following his first turn as Attorney General, he led a major telecommunications company through a number of high-profile mergers as General Counsel. Barr is now Of Counsel of a law firm that is active in the M&A space, and sits on the boards of several large, public companies, one of which has been in litigation with the DOJ over a high-profile merger. In that matter, Barr filed a declaration dueling with those filed by Assistant Attorney General for the Antitrust Division, Makan Delrahim and his Deputy, Andrew Finch, regarding remarks made in meetings between the DOJ’s Antitrust Division and the merging parties. In the confirmation hearings, Barr deftly avoided controversy on the subject, agreeing to recuse himself from the Antitrust Division’s actions regarding the merger.
While his testimony regarding antitrust enforcement did not create many headlines, Barr importantly affirmed his commitment to the consumer welfare standard. The consumer welfare standard, which generally provides that enforcers should look to overall consumer welfare and economic efficiency in evaluating competitive effects, has largely guided antitrust enforcement for the past 40 years. Yet, the standard has come under fire from those advocating that enforcers adopt a standard focused more on market concentration or the competitive process. While this debate continues among academics and practitioners, Barr’s testimony made clear that the consumer welfare standard will help guide enforcement by the Antitrust Division under his watch.
Additionally, Barr’s previous experience indicates he will encourage interagency cooperation. During Barr’s tenure as Attorney General, the DOJ and the FTC published the 1992 Horizontal Merger Guidelines, which were the first joint merger guidelines from the two agencies. The guidelines introduced a structured framework for analyzing mergers and clarified the significance of unilateral effects and market entry. Barr lauded the cooperative effort between the agencies as a “major step forward,” adding that “the standards to be applied should not depend on which agency is analyzing a particular merger.
Areas of focus for Barr
While antitrust enforcement may be becoming an increasingly politicized issue, most policies are fairly consistent from administration to administration and, consequently, from one Attorney General to the next. Nevertheless, there are a few particular areas of enforcement in which there are opportunities for Barr to guide antitrust policy:
- Cartel enforcement. Under Barr’s aegis as Attorney General, the Antitrust Division announced a change in international enforcement policy that allowed prosecutors to bring cases where anticompetitive conduct harmed U.S. exporters in foreign markets, regardless of whether there was direct harm to U.S. consumers. Given his prior experience, Barr may help revitalize international cartel enforcement, which has stalled since 2016. Barr could, for example, soften or withdraw changes to the leniency policy – such as the reduction in protections previously extended to current and former employees or the requirement that culpable employees be terminated – to restore the transparency and certainty that made the Leniency Program successful.
- Tech enforcement. The tech industry has come under increasing scrutiny lately, with rumors that the DOJ and the FTC are considering investigations into multiple tech giants regarding antitrust, consumer protection, or data privacy issues. During the confirmation hearings, Barr acknowledged the potential issues raised by the business and size of the largest of these companies, saying that “I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of antitrust enforcers.” Nevertheless, he cautioned that companies can “win ... in the marketplace without violating the antitrust laws” and ultimately concluded that he would “have to think long and hard before [saying] it was really the stuff of an antitrust matter.”
- Vertical mergers. Vertical merger challenges are fairly infrequent and certainly have been rare in recent years. With the Antitrust Division’s recent high-profile challenge to one, the question arose as to whether this challenge signaled the start of a trend. Given Barr’s recent experience with the Antitrust Division regarding that merger challenge, it will be interesting to see if the more vigorous vertical merger enforcement that began in Delrahim’s tenure continues.
Barr’s earlier tenure as Attorney General and experience in the private sector provide insight into how antitrust enforcement could change under his leadership. Importantly, he may well take a greater interest in antitrust enforcement and the work of the Antitrust Division than did Attorney General Sessions. Moreover, given Barr’s prior initiative broadening cartel enforcement, he may turn his attention to reinvigorating the Leniency Program in hopes of attaining the record-high fines and prison sentences imposed during the auto parts and financial services investigations. We also wonder whether the Antitrust Division will continue to push back on vertical mergers, or whether the recent vertical merger challenge will come to represent an enforcement anomaly by the current Administration. Although Barr is expected to act consistently with the enforcement policies and priorities of prior Republican administrations, he also pledged independence during his confirmation hearings. He now has the opportunity to put his imprint on the DOJ’s antitrust enforcement policies and priorities.
Client Alert 2019-045
