DOJ Signals Faster Merger Review and Pushes Federal Primacy in Antitrust Enforcement over States
Associate Attorney General Stanley E. Woodward, Jr. spoke at Fordham University’s Competition Law Institute's Annual Conference on International Antitrust Law and Policy on Thursday – his first antitrust speech in this role. The speech previewed how the Justice Department plans to handle merger enforcement over the remaining two years of the Trump Administration, laying down a marker that is likely to matter in high profile deal litigation: what he calls “antitrust federalism.” While he acknowledged the role of the states in enforcing the antitrust laws, he made clear that, in the DOJ’s point of view, federal enforcers should take the lead in reviewing or blocking transactions.
A Time Limited Agenda, Focused on Streamlining Merger Review
Woodward said the Department remains committed to litigating against anticompetitive deals. He also noted that the Department is working against a clock, with two years left in the current term. That timeline is top of mind as the Division sets its priorities.
Accordingly, Woodward outlined several process changes meant to make merger review faster and more predictable:
The Antitrust Division has adopted a new model timing agreement
Staff are also taking a phased approach to second requests, which should let parties address the most significant competitive questions first rather than responding to an entire request at once.
And the Division will take up early termination sooner in the process.
For parties to clean deals, these changes may shorten the road to clearance. They also reward counsel who engage early and substantively with staff.
Settlements
Woodward described settlements as central to all litigation, antitrust included, and acknowledged that settlements involve trade-offs by their nature. His comments suggest a Department that is willing to negotiate remedies rather than take every contested matter to trial.
Antitrust Federalism and the Paramount Litigation
The most significant part of the speech was Woodward's treatment of antitrust federalism. He described a choir of enforcers that includes states and territories, and he faulted states for sticking a foot in the door at the last minute, after federal review has run its course —primarily alluding to the state’s recent Tunney Act intervention in HPE-Juniper.
These remarks expand on a statement of interest the Department filed earlier this week in the California led challenge to the Paramount-Warner Bros. Discovery merger. The Department cleared the transaction in June and issued a rare closing statement. Then in July, twelve states sued to block the deal.
The Department is not a party, but its filing supports Paramount's request that the plaintiffs post a bond under Section 16 of the Clayton Act. Three arguments in the filing illustrate the theory Woodward sketched out at Fordham.
First, the DOJ and FTC make national decisions, so those determinations come before the states. As the filing put it, Congress provided for complementary enforcement by the federal government and private parties, but made clear that it was not a system of equals.
Second, states that sue under federal law are, in effect, private plaintiffs who are asserting a specific injury. The Department contends the states must post a proper bond because they act in the role of private persons when they enforce federal antitrust law. If let to stand, this would dramatically re-order American antitrust enforcement.
Third, plaintiffs should bear the cost of delay. The Department rejected the states' position that a bond is owed only if a court later finds the injunction was improvidently granted. Taken together, if the statement of interest and Woodward’s vision became standard operating procedure, it would dramatically re-order American antitrust enforcement.
What This Means for State Enforcement
In his speech, Associate Attorney General Woodward made mention of continued cooperation between the states and DOJ on antitrust matters, singling out a transaction in Tennessee where the Department and the state AG worked to force a divestiture in a intra-Tennessee transaction. In that matter, there was a clear nexus for state interest. Yet that leaves questions as to where state interests ends and national interests begin. Filmmaking is obviously important to California, and local broadcasting is important to every state. So are Paramount-WBD and Nexstar-Tegna state challenges meritorious?
If courts adopt the Department's view, states that challenge a federally cleared transaction could face real financial exposure, which may give them pause before filing late in the process. Parties should not read that as the end of antitrust risk once federal clearance is in hand. The state attorneys general in the Paramount matter took part in the Department's investigation, shared information and depositions with the agency, and sued anyway.
The bottom line: State engagement should still be part of any regulatory risk calculation from the start rather than as a formality at the end, and to account for the possibility of post clearance litigation when negotiating outside dates, ticking fees, and other timing provisions.