August 9, 2024

By Matt Wiederrecht, Head of Capstone’s Special Situations Team

If elected president, Vice President Kamala Harris will likely take a more accommodative approach on antitrust issues than the Biden administration, depending who is heading the Federal Trade Commission (FTC), Federal Communications Commission (FCC), and US Department of Justice (DOJ). If Republicans control the Senate, Harris will likely nominate more moderate policymakers, leading to a more accommodative antitrust environment.

• Capstone believes some of the key people Harris would task with overseeing antitrust policy and merger approvals at the FTC, FCC, and DOJ Antitrust Division will likely not be at their posts if Democrats maintain control over the White House in 2025.  While the president does nominate candidates and issues executive orders directing agencies to promote policies that are supportive of competition, it is still up to the Senate to confirm the heads of these agencies.
• FTC Chair Lina Khan’s term expires in September 2024, and it is unclear if she will be confirmed for another term. With Senator Bob Menendez (D-NJ) set to resign effective August 20^th, Democrats may not be able to get progressive appointees confirmed by the Senate. Khan can stay on the FTC until her replacement is nominated and confirmed by the Senate, which could allow her to stay as a holdover past the expiration of her term.
• Capstone believes it is unlikely Federal Communications Commission Chair Jessica Rosenworcel and US Department of Justice (DOJ) Assistant Attorney General (AAG) for Antitrust Jonathan Kanter, two critical regulators on antitrust actions, will stay in their current posts throughout 2025 and will likely do little more than help usher in a Harris administration.  

What Harris Has Said About Antitrust Policy

There is little on record of Vice President Harris commenting on competition policy, and she has avoided making firm commitments to enforcing antitrust laws, even when she asked about this issue when she was attorney general of California. However, Harris said, “Bad businesses are not good for good businesses,” which makes us believe she would be more than willing to allow DOJ and the FTC to go after bad actors for violations whether it is a merger that would lead to too much consolidation in a market or companies engaged in price collusion. She is also openly pro-union and wants to build up the middle class.

However, Harris may not be as aggressive on antitrust policy as the Biden administration has been due to her ties to Big Tech in Silicon Valley, and she may be less willing to call for the breakup of companies such as Alphabet Inc. (GOOG) or Meta Platforms Inc. (META). We believe she will likely appoint individuals to the FTC and DOJ who will pursue antitrust cases that depend less on speculative theories and more on legal theories that have proved to be successful in past antitrust cases.

How Harris Differs from Biden

Capstone believes a Harris administration will likely take a different course with nominations and appointments than the Biden administration. Biden’s courtship of progressives started during the 2020 presidential campaign when he pledged to back progressive policy agendas in his administration, including climate change. Progressives expected President Biden to thank them for their support with some political appointments at key agencies, which is what happened. While not all were confirmed, enough nominees made it through the Senate to help steer the administration in a more progressive direction. Khan’s nomination to the FTC and elevation to chair is perhaps one of the most noteworthy positions where Biden successfully got a progressive confirmed even though Republicans controlled the Senate at the time.

Harris will likely be less beholden to the progressive wing of the Democratic Party. We believe the run for progressives will likely come to a halt in 2025 if the Senate ends up under Republican control. They learned from the Khan appointment and confirmation when they failed to act in unison to block a nominee they viewed as too progressive. Republicans changed course after this and successfully stalled Gigi Sohn’s nomination to fill the fifth seat on the FCC until she voluntarily withdrew.

FCC Chair Rosenworcel’s term ends in June 2025 and she could decide to leave the commission after serving on it since 2012. Given the FCC’s proactive role in approving transactions in the broadcast media and telecommunications industry and the importance of the chair in setting the agenda for the commission, we view this position as critical in setting competition policy for companies under its authority, including SES SA (SESG on Euronext Paris) Intelsat SA.

There also is speculation that AAG Kanter could leave his post at the end of the Biden administration for the private sector. Kanter has been running antitrust for DOJ since 2021, which is longer than the division head of antitrust typically serves. Capstone will continue to monitor developments with this agency.

Key Priorities for a Democratic Administration

After taking a hard look at consolidation across a number of industries, Democrats have largely blamed consolidation for the erosion in worker protections, inflation at the consumer level, and an excessive level of wealth concentration into the hands of a very small number of people. Democrats want to see more competition throughout the economy, arguing it leads to higher wages, lower prices, and more opportunities for small businesses. We believe a Harris White House will continue to pursue antitrust cases that meet these goals.

In addition, Capstone believes a Democratic administration will continue to promote competition by blocking transactions that lead to too much consolidation in a particular market. Industries where there is particular sensitivity toward consolidation are those that tend to be either consumer-facing, such as the retail sector, or the workers are members of unions opposed to consolidation. Examples of recent transactions where organized labor has opposed a merger include JetBlue Corp.’s (JBLU) acquisition of Spirit Airlines Inc. (SAVE) and Kroger Co.’s (KR) acquisition of Albertsons Companies. Inc. (ACI). Regulators blocked both transactions at least due to the impact on organized labor, as well as the negative effect the transactions would have on consumers.

Capstone also believes under a Harris administration, action will likely continue on the recent antitrust complaint seeking to block Tempur Sealy International Inc.’s (TPX) proposed $4 billion takeover of Mattress Firm, which all five FTC commissioners supported. The takeover apparently is being blocked because internal Tempur Sealy documents suggest the transaction is anti-competitive. We believe in this instance, Harris will support allowing regulators at the FTC and DOJ to continue their investigations almost without restriction, especially if more moderate individuals are selected to fill vacancies over at the FTC, FCC, and DOJ and are confirmed by a Republican Senate.

What’s Next

Capstone expects Harris will be officially nominated at the Democratic National Convention in Chicago, and we will continue to watch for any position statements her campaign team may release, particularly if Harris selects a running mate ahead of the August 19^th-22^nd convention.

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