Monopoly! This is the last word in the “latest phase of capitalist development”.
--V.I. Lenin --- NY Times, November 11, 2008 DealBook Why Obama May Assent to Deals By ANDREW ROSS SORKIN “Antitrust theory is theoretical. Losing jobs and plants is real.” So said David Boies, the superlawyer the government hired in the 1990s to bust up the Microsoft Corporation. It was Saturday, just four days after Senator Barack Obama won the presidential election, and Mr. Boies was already laying out how the deal landscape in general, and Washington’s antitrust policy in particular, were likely to change over the next four years. We were having lunch on the Upper East Side, and Mr. Boies, between bites of salmon and asparagus, was working his cellphone for yet another high-profile deal: He’s representing Maurice R. Greenberg, known as Hank, in his fight against the American International Group, the troubled insurance giant Mr. Greenberg used to run. Speculation was swirling that the government was about to overhaul its rescue of A.I.G. (the announcement came Monday) and Mr. Boies was lobbying to help shareholders like Mr. Greenberg. But A.I.G. wasn’t the main topic of conversation. Mr. Boies was more focused on the challenges the new administration faces and the possibility of a wave of mergers and acquisitions, consolidating some of the biggest names in the country. Wait a minute. Isn’t the conventional wisdom that deal-making is going to be tougher under Mr. Obama and a Democratic administration? To the contrary, Mr. Boies said. At least over the next two years, the exact opposite will be true. Mr. Obama might want to police antitrust issues, but the economy is in such sorry shape that he probably won’t be able to, Mr. Boies said. It just won’t be politically palatable to kill deals that could save some jobs. “Preserving jobs and economic stability will be perceived as more important than preserving competition,” Mr. Boies said. Washington, of course, has tilted toward would-be monopolists for decades, starting with President Reagan. Mr. Obama, of all people, could be the one who takes things the other way. It’s not quite a Nixon-in-China moment, but it has that feeling. We’ve been deregulating and fighting new rules for three decades. Everyone thinks that’s going to change now, given the catastrophic failures of the financial industry. But the cold, economic reality, at least according to Mr. Boies, who supported Mr. Obama and previously worked for Al Gore during the recount in Florida, means politicians literally won’t be able to afford to worry about anticompetitive practices as much — which is good for the winners (and their deal makers), but maybe not so good for the rest of us. The prospect gives Mr. Boies, who runs Boies, Schiller & Flexner, some pause. He pointed to the huge consolidation that took place in the 1930s, often of distressed companies, but also of other behemoths like utilities. “The Supreme Court decisions that came out of the 1930s approved conduct that was clearly against antitrust law,” he said. The question now is whether we will see a handful of otherwise objectionable deals as big companies claim that the sky is falling and that a deal is being done out of necessity. (General Motors-Chrysler comes to mind.) In the last several years, we saw companies like Sirius and XM Satellite Radio merge, squeezing though in the last days of the Bush administration in hopes of guaranteeing passage of the deal. Likewise, one reason Microsoft privately said it dropped its bid for Yahoo last summer was that it worried the deal wouldn’t be approved after the Bush administration left office. “The Bush administration presented a special window of opportunity,” Mr. Boies said, saying that if his prediction is wrong it will only be because so many companies that sought to merge had already done so. Our conversation turned to the decision by Google to bail out of its deal with Yahoo. I asked why the deal was going to be turned down by the government, especially in the waning days of the administration. “At the end of every administration the staff tends to have more influence. The staff tends to be more interested in long-term antitrust policy,” he said. “The political people have already moved on.” As he ordered a dessert of mixed berries — strawberries and raspberries, “no blueberries” — he started in another worry: that the consolidation of financial services companies won’t just create firms that are “too big to fail” but firms, as he said, that will be “too big to compete.” He suggested that while the firms would be heavily regulated, that was no replacement for antitrust enforcement. “The regulators end up being, with a few notable exceptions, co-opted by the industries they regulate,” he said, ticking off airlines and railroads as examples. “You do not get a pro-consumer effect that you get in a free market,” Mr. Boies said. The biggest regulatory challenge the nation will face in the Obama administration is not antitrust enforcement, he said, but our protectionist views to outside capital, especially when we may need it most. A proponent of globalization, which he said helps “recycle petro dollars,” Mr. Boies predicted, for example, that “there would be huge opposition to Citigroup getting taken over by a player in the Middle East or Asia.” He added, “We still have to come to grips we live in a global economy.” _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
