The election results have sparked a palpable sense of anticipation, if not outright salivation, among corporate leaders, predicting a surge in consolidation, particularly in sectors like tech, media, and finance under the incoming administration. This renewed optimism over mergers and acquisitions is fueled by expectations of a pullback of the Biden administration’s vigorous regulatory and legal enforcement of antitrust law.
When it comes to antitrust, C-suite leaders should be careful what they wish for from Donald Trump’s second administration. It might feel more business-friendly until, rapidly and unpredictably, it is not. While some executives have found competition enforcement under Department of Justice Assistant Attorney General Jonathan Kanter and Federal Trade Commission Chair Lina Khan to be threatening, Trump’s governing philosophy demands loyalty and submission to his vagaries. The editor-in-chief of this publication, Paul Glastris, made the point just before the election that Trump’s first-term antitrust impulses were primarily driven by his pique. That kind of mercurial, unpredictable regimen contrasts with the rule-of-law, evidence-based approach Kanter and Khan have taken.
Trump’s second-term appointees could use the federal government’s considerable antitrust powers to literally pick business winners and losers based on political affiliation and personal allegiance. Call it an industrial policy based on temper tantrums. In 2017, Trump’s Department of Justice sued to block AT&T’s acquisition of Time Warner, reportedly at the then-president’s direction, as a punitive move against CNN for what he viewed as unfavorable treatment. Meanwhile, the same DOJ approved The Walt Disney Company’s $71 billion deal for 21st Century Fox, deepening the media consolidation it sought to block with AT&T. What explains the wildly different approach? Trump publicly congratulating News Corporation mogul Rupert Murdoch—whose family received over $2 billion in the deal and a significant stake in the combined company—might indicate a motive. Under Trump, favoritism was rampant across the federal government.
This approach—based more on volatility than reason—would hinder the innovation businesses claim to champion. Regulators pursuing penalties without a transparent rationale turn companies defensive. Shifting from a rule-of-law competition policy to a rule-of-one antitrust approach, companies would be less likely to pursue promising technologies or ambitious projects. Innovation demands regulatory stability, not chaos, where businesses fear punitive antitrust measures. And if the presidential transition is any guide, with its ad-hoc appointments, the second Trump term will supercharge the capricious tendencies of his first. The long-term principles set out in the Biden administration’s 2023 Merger Guidelines may have seemed onerous to some CEOs, but the alternative—No Merger Guidelines, Just Rage—may prove less alluring.
History shows fair and honest competition requires predictable rules and impartial enforcers. The post-1981 merger mania unleashed by a decline in antitrust enforcement did not bring economic prosperity. Between 1950 and 1980—the New Deal era—the economy grew, on average, 1.3 points faster than between 1980 and 2016 as concentration expanded and incumbents stifled competition.
Trump rode a wave of frustration and anger to victory in part over an economy in which entrenched monopolies set the rules for everyone else. While Vice President-elect J.D. Vance has voiced support for a vigorous antitrust policy and has even had some kind words about Khan, it’s still hard to imagine Trump 47’s antitrust approach being impartial and serving the public interest like the current FTC chair. Just ask yourself the odds of Trump loyalists tackling corporate interests that have supported Republicans, such as the oil and gas industry, in the same way that Khan and Kanter were willing to go after firms atop the Democratic-leaning world of Silicon Valley.
Business leaders should realize that selective, politically motivated lawsuits won’t stem widespread anti-corporate sentiment across traditional party lines. Quite the opposite. Consumers may soon find themselves facing fewer product offerings at higher costs. Workers will lose the protection the FTC provides when they are compelled to sign noncompetes, which limit their wages and opportunities. In the end, businesses may well have underpriced the value of a stable operating environment that rewards competition rather than submission.
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