However little hope the election of Donald Trump left, for some antitrust watchers it hid the slimmest of silver linings: Maybe, just maybe, some thought, Trump’s criticisms of corporate power on the campaign trail (Amazon, Time Warner) were more than just attacks on his political enemies (Jeff Bezos, CNN) and would translate into meaningful enforcement of antitrust and other laws. Some held similar hope for the Trump Justice Department’s new antitrust chief, Makan Delrahim, who gave several barn-burning speeches early on that promised tougher enforcement. Immediately on taking office in 2017, Delrahim brought an extraordinary challenge to the merger of AT&T and Time Warner, the government’s first vertical merger case in 40 years. Antitrust believers cheered, cautiously hoping that Trump’s promises to use the law against concentrated power were worth more than empty air.
In light of several remarkable recent events, and rumors that Delrahim may soon leave the Department of Justice, it is worth asking how well one of Trump’s principal antitrust enforcers—and by extension Trump himself—delivered on antitrust. There is a growing consensus, after all, that America has developed a serious “monopoly problem,” one that journalists, civil society, and Congress are scrutinizing more and more. But history will not be kind to Delrahim or what might have been his contributions to this awakening. Probably no U.S. antitrust chief has ever failed quite so thoroughly and variously.
Two nails sealed this coffin. First, Delrahim wrote last month to congressional leaders to discredit a DOJ Antitrust Division whistleblower, and his transparently dishonest arguments were repeated with much indignation by a recently departed deputy. The whistleblower testified that Delrahim and Attorney General William Barr abused antitrust enforcement to punish political opponents. The most important revelation was that they ordered burdensome informational demands to marijuana industry mergers that they had no intention of challenging under the antitrust laws.
None of this had been public, and it was shocking. So was the the deception with which Delrahim attempted to wave it away. Because federal merger review is bureaucratically opaque, his letter might strike many as pretty reasonable. The Justice Department must quickly review many large mergers, and Delrahim said his team needed to learn as much as it could of this new, idiosyncratic, and fast-growing industry.
His claims were facially absurd. The “second requests” he ordered to marijuana companies are extremely burdensome impositions reserved for a tiny fraction of the thousands of mergers reviewed every year. Because they impose extraordinary and expensive demands on the firms that receive them, they are not issued except with respect to deals that are very likely illegal. But in fiscal year 2019, DOJ issued nearly a third of the second requests it sent to the entire American economy to this one small industry, each of them involving deals that would not have been challenged in court. The Justice Department—which after all contains the Drug Enforcement Administration—knows more than enough about the industry to handle merger review. And indeed, antitrust enforcers have never done anything like this before, though our massive economy constantly generates previously unknown products and industries.
More remarkable than what Delrahim said are the things he didn’t say. He didn’t dispute the whistleblower’s claim that DOJ staff were ordered not to interview customers and competitors of the firms under review—even though third-party interviews are bread and butter in merger investigations and are required by the agency’s operating manual—nor that, once the merging firms complied and delivered millions of pages of documents, the investigators didn’t really read them. He disputed neither that the deals were likely legal, nor that—unbelievably—in two of them the merging firms did not even compete geographically. No competent antitrust lawyer could imagine the Justice Department actually challenging such a deal under existing law, and it would be amazing if a second request was issued to even one such case in the prior 45-year history of federal merger review. Impossibly, Delrahim issued 10 of them in one year, all to firms that just happen to be politically disfavored by his party, and asked Congress to accept that it was honest law enforcement.
The other recent development was a press release, the strange coda to a transaction that will be remembered as one of Delrahim’s most regrettable acts. The notice congratulated the cellphone carrier T-Mobile for completing divestitures in support of its acquisition of Sprint. The deal, approved by Delrahim’s agency last year, leaves only three meaningful wireless carriers to serve the entire economy, subject to a transparently feeble package of remedial divestitures, approving a consolidation essentially the same as one the Obama administration blocked just a few years earlier. It was revealed that the agency didn’t just approve the deal, but that Delrahim personally worked to make it happen, lobbying other regulators and members of Congress and helping to secure a divestiture buyer. As the New York Times editorial board put it, he was caught “treating T-Mobile like a client” rather than a firm he was supposed to regulate. That oddly congratulatory press release failed to mention a fact the agency was required to acknowledge in court the next day: that even the thin remedial divestitures the agency required for the deal to go through would not be fully carried out.
The series of other failures during Delrahim’s three-year tenure are grave in number and importance, even beyond the agency’s breathtaking failure to enforce the antitrust laws themselves and the disaster of its morale. Delrahim’s conflicts with the other antitrust agency, the Federal Trade Commission, grew bad enough to draw congressional inquiry, even before his agency’s absolutely unheard-of interference in the FTC’s case against chip maker Qualcomm. Delrahim also seriously aggravated tensions with state attorneys general. During the T-Mobile investigation, for example, he convened them to solicit their support for the deal, but apparently excluded Democrats, and he aggressively interfered in their separate lawsuit challenging the deal. He has also been dogged by appearances of impropriety, including most glaringly in the Qualcomm controversy, as he’d represented Qualcomm prior to federal service. Among the grossest and least concealed abuses of this office—until revelation of the marijuana cases—was investigation of automakers for working with California environmental regulators, a case that no competent antitrust lawyer could have imagined generating serious legal challenge.
This story can end where it began, with the AT&T/Time Warner challenge. An allegation that struck most antitrust lawyers as unlikely when the suit was brought—that Delrahim ordered it to punish President Trump’s political enemy, the Time Warner unit CNN—now seems hard to doubt. Like many others, I didn’t believe it, because it would have been the biggest scandal in antitrust since Richard Nixon was caught interfering in cases in exchange for political favors. But whatever was Delrahim’s personal motivation—whether the White House ordered the suit, as critics have claimed, or agreeing to bring it was a quid-pro-quo for his appointment, or whatever else—it now seems hard to imagine that it was anything other than a retaliation against a Trump political opponent. Trump and Delrahim, hailed by some as the last hope for this broken area of the law, have instead left the Antitrust Division a corrupted and misbegotten shambles. With any luck, the repair of its dignity can begin in just a few months.
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