Investors expect an antitrust 'sea change' under Trump. Legal experts aren’t so sure.
11/07/2024 17:05
Investors are cheering the end of an aggressive era of antitrust enforcement now that Donald Trump is returning to the White House. But some legal experts aren’t so sure that’s what will happen.
Investors are cheering what they hope is the end of an aggressive era of antitrust enforcement that featured federal confrontations with some of America’s corporate giants.
But some legal experts aren’t so sure that’s what will transpire under new President Donald Trump, who was elected this week.
"I am not necessarily convinced that we're going to go back to what people would call sort of the regular order of Republicans," said antitrust attorney Mark Wagoner. "The new Republican Party is very much a populist party. It's no longer the party of big business."
The stocks of some companies that would benefit from a more lenient approach to antitrust enforcement rose Wednesday in the hours after Trump’s victory, including some giants currently facing monopoly lawsuits or merger reviews from the Federal Trade Commission and the Justice Department.
One was Capital One (COF), a big credit card lender that rose more than 14% Wednesday. It is currently trying to get regulatory approval to merge with credit card lender and network Discover Financial Services (DFS).
Some of the tech giants facing antitrust cases brought by federal officials also rose, including Google (GOOG, GOOGL), and Amazon (AMZN).
"I think tech companies will be major winners," Northwestern University law professor Andrew Stoltmann told Yahoo Finance.
Stoltmann expects Trump to "neuter" the FTC and strip it of its power to enforce the nation’s competition laws. In that case, litigation already underway against the companies could have lighter consequences under the incoming president.
Former US Deputy Treasury Secretary Roger Altman also predicted a “sea change" in antitrust enforcement in an interview Wednesday with CNBC.
But Wagoner, an antitrust attorney and former chairman of the Ohio State Bar Association’s antitrust section, isn’t so sure that is what will happen. He expects an entirely different approach from a Trump-led FTC and DOJ.
"I don't think you're going to see a tectonic shift in tech," Wagoner said.
Former FTC commissioner, William Kovacic, agreed that there may not be an overhaul of President Joe Biden’s antitrust approach, but for a different reason.
Kovacic forecasted that Trump would press forward with the government’s antitrust cases and investigations, especially those targeting Big Tech.
"These are companies he doesn't like," Kovacic said about the tech businesses.
Both Wagoner and Kovacic noted that it was Trump’s first administration that initially sued Google over antitrust concerns, which led to a ruling by a district court judge in August that the tech giant illegally monopolized the search engine market.
It was also Trump’s first administration that sought to unwind Meta’s (META) acquisitions of Instagram and WhatsApp, and that launched the investigation into Apple (APPL), leading the Biden administration to sue the iPhone maker.
"In a way, [Trump] can look at some of those cases and say: 'They began when I was there, so who says I don't care about antitrust? I provided the launching pad for these matters,'" Kovacic said.
Little was said on the campaign trail by Trump about how he would mold the Justice Department and or the FTC.
He was, however, asked whether he supported a breakup of Google as an antidote to unhealthy competition in the search engine market.
Trump suggested that Google’s punishment could be accomplished without forcing it to sell off parts of its empire.
"What you can do without breaking it up is make sure it’s more fair," Trump said in an Oct. 15 interview. The former president described Google’s search engine as "rigged" and expressed concern that consequences for Google in the case could favor China.
What many observers are watching for is what happens to FTC boss Lina Khan. She is all but assured to be stripped of her position as chair, so that a Republican member can take the lead role.
Tesla (TSLA) CEO and X owner, Elon Musk, who donated millions to Trump’s presidential run and publicly campaigned for the former president, posted on X saying Khan "will be fired soon."
However, Khan’s six-year term would permit her to continue serving on the commission, something that Wagoner and Kovacic suspect she may choose.
And she has at least one fan with a high-ranking member of Trump’s team.
"I guess I look at Lina Khan as one of the few people in the Biden administration that I think is doing a pretty good job," Vice President-elect JD Vance said during a Bloomberg technology forum in February.
In Wagoner’s view, the populist message from Trump and Vance are added reasons to anticipate that a new Trump administration will keep up pressure on merger challenges and suspected anticompetitive conduct.
"One of the big differences between populists and big business is antitrust policy," Wagoner said. "You talk to the average populist, and they don't like big companies, they don't like mergers, they think things should be smaller."
The leaders of some companies currently facing antitrust challenges praised Trump on Wednesday. One was Tim Cook, the CEO of Apple.
"Congratulations President Trump on your victory!" Cook said on X. "We look forward to engaging with you and your administration to help make sure the United States continues to lead with and be fueled by ingenuity, innovation, and creativity."
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