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Pot and Car Antitrust Cases Expose White House’s Whims

Joe Nocera

(Bloomberg Opinion) -- Makan Delrahim is one of President Donald Trump’s many appointees whose reputation will end up in tatters. If there were any doubt about that, it was erased on Wednesday afternoon when one of his career staff members, John W. Elias, testified before the House Judiciary Committee.

Delrahim, as you may recall, is the assistant attorney general in charge of the Justice Department’s antitrust division. Before taking that post, he worked for a big Los Angeles law firm — his antitrust clients included Google and Apple — and as an adjunct professor at the Caruso School of Law at Pepperdine University. He wasn’t one of the big names in antitrust, but he was respected.

Yet almost from the moment Delrahim took over antitrust enforcement in 2017, the division took one step after another that seemed to have more to do with catering to Trump’s whims than with following antitrust law. Delrahim decided to go to court to block the AT&T-Time Warner merger — even though the department had been on the verge of approving it before he arrived. (Trump views CNN, which was owned by Time Warner, as his enemy.)

He waved through the merger of the Walt Disney Co. and 21st Century Fox Inc., which was run by Trump ally Rupert Murdoch, even though it posed a number of significant antitrust issues. He spent several years contending that the big tech companies like Facebook and Google did not raise antitrust problems — until it became clear that Trump wanted to find a way to put the hammer to them. At which point, he changed his stance and said they were a problem after all.

With each new ruling, I wrote columns making the circumstantial case that Delrahim was doing the president’s bidding instead of upholding the law — and in doing so, he was damaging the rule of law. I was hardly alone. In May 2019, Representative David Cicilline of Rhode Island, the Democrat who is chairman of the House antitrust subcommittee, accused the division of undermining enforcement and using  it as a weapon.

Delrahim, of course, strongly denied doing anything of the sort. In response to a question about one politically charged case, he said, “I wasn’t told by the White House” what to do. “I wasn’t asked or directed or even communicated with the White House.”

If those denials seemed unconvincing before Wednesday’s Judiciary Committee meeting, they were in absolute shreds by the time Elias finished testifying. Elias told the committee that the antitrust division had spent an inordinate amount of time doing deep investigations into mergers of cannabis companies — which were far too small to pose antitrust issues — because Attorney General William Barr didn’t like the industry.

And he said that 24 hours after an angry Trump tweet, the antitrust division launched an investigation into the four automobile companies that had sided with California on emissions standards that Trump wanted to lower.

The evidence from Elias, who had reported his concerns to the Justice Department’s inspector general, was compelling. In March 2019, he said, after one of the early marijuana mergers was proposed, Barr held a meeting with the antitrust division’s top lawyers. In preparing for the meeting, the staff prepared a memo emphasizing that “the transaction was unlikely to raise any significant competitive concerns that would justify issuance of second requests.” (Second requests refer to the division’s phrase for a significant investigation into a deal.)

Barr rejected the memo and insisted that the division go forward with the second requests. Why? “Because he didn’t like the underlying business,” Elias said. He added that nearly a third of the division’s second requests — which require companies to generate sometimes more than 1 million pages of documents — were spent on cannabis mergers. In one case, he said, the combined companies would have held 0.35% of the market share. It still had to undergo a second request.

The California auto investigation was equally bogus — indeed, it lacked an antitrust hook altogether. When the staff “expressed concerns about the legal and factual basis for the investigation,” Delrahim simply wrote the letter to the auto companies himself, telling them they were being investigated. The division first issued subpoenas to each company, and after hitting a brick wall, it tried to make hay by looking into California’s decision to buy government cars only from those automakers. It finally gave up in February.

It takes courage for a career official — someone still on the job — to stand up against political appointees who are perverting the law. Elias — as well as the other career Justice Department officials who testified on Wednesday — got roughed up a bit by the Republicans. There could be career consequences down the line. But anyone who watched the hearing knew that the badgering they got from the Republican committee members was just part of the circus. They had to know that by the time they walked out of the hearing room their names would be added to the handful of others, like Fiona Hill and Marie Yovanovitch, who would forever be known for having done the right thing.

One hopes that Delrahim is enjoying his time running a vital federal department. Because he, too, will someday be known for something. He will join the ranks of all those who helped a venal president chip away at the rule of law and damage our democracy.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."

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