There is much discussion about what Hal Singer has dubbed “Gangster Antitrust,” the extraction of payments, bribes, or other concessions to allow passage of an otherwise anticompetitive merger. Gangster Antitrust can also take the form of conditioning the approval of a procompetitive merger on a seemingly unrelated remedy that advances the political interests of the administration. “Nice merger—be a shame if anything happened to it!”
David Dayen of the American Prospect correctly wrote that there is a law that is supposed to prevent such skullduggery, the Tunney Act, to assure that consent decrees by the Department of Justice (DOJ) are in the “public interest.” The Tunney Act of 1974 was drafted to prevent judicial “rubber stamping” of consent decrees. As explained here, the Tunney Act and its 2004 amendment, prohibiting continued judicial rubber stamping, have yielded just more vigorous rubber stamping.
I’ve written on the Tunney Act twice before, once with John J. Flynn, who happened to assist in its drafting, about the misuse of the Tunney Act in the Microsoft cases to compel the district court to accept a weakened settlement. I wrote a second time, after the D.C. Circuit continued to engage in activist and blatant disregard for the 2004 Tunney Act amendment.
Unfortunately, the Tunney Act’s purpose has been stifled by D.C. Circuit caselaw, and even the Act’s most fundamental purpose of destroying corruption has been neutered.
A brief history of the Act
The Tunney Act, named after Senator John V. Tunney, emerged from scandal surrounding backroom dealings to settle a DOJ merger challenge. It first became a major issue during hearings on Richard Kleindienst’s nomination to be attorney general. Senator Tunney expressed outrage at such closed-door discussions.
In 1969, the DOJ sued to prevent ITT’s acquisition of three companies under Section 7 of the Clayton Act. The DOJ lost two of the three suits. In 1971, the DOJ and ITT agreed to a settlement of the remaining suit. ITT was allowed to retain Hartford Fire Insurance Company but was required to divest several Hartford subsidiaries. The DOJ made no public statement as to the underlying reasons for the settlement. Instead, as was common practice at the time, only the proposed decree was made public.
Two significant events occurred that made people suspicious. First, President Nixon nominated Richard Kleindienst to be attorney general. Kleindienst had been involved in the ITT litigation in his capacity as deputy attorney general, and questions arose concerning his participation in the settlement of the case. Second, ITT offered to help finance the 1972 Republican National Convention. While no quid pro quo was proven, the appearance of impropriety sparked significant debate. (If you want to hear President Nixon ordering a DOJ official to back off the merger, you can listen here.)
Moreover, Kleindienst’s confirmation hearings revealed to the public for the first time the underlying rationale for the DOJ settlement with ITT: Kleindienst asserted that one reason for the settlement was DOJ fear that divestiture would cause ITT’s stock price to fall, causing hardship to shareholders. Another DOJ concern was apparently that the plummeting stock price would ripple throughout the U.S. economy.
All of this seems tame by today’s standards. But at the time, it was a massive scandal. The Supreme Court typically deferred to the DOJ traditionally with respect to consent decrees.
How the Act lost its teeth
Despite the Tunney Act’s prohibition against rubber-stamping, with rare exception, courts have continued to serve as rubber stamps, and the D.C. Circuit caselaw has played an important role in the rubber stamping. The basic standard laid out by the D.C. Circuit appears in the first Microsoft case, in which Judge Sporkin rejected the DOJ’s mealy-mouthed remedies (and eventually led to Microsoft II). The D.C. Circuit wrote:
A decree, even entered as a pretrial settlement, is a judicial act, and therefore the district judge is not obliged to accept one that, on its face and even after government explanation, appears to make a mockery of judicial power. Short of that eventuality, the Tunney Act cannot be interpreted as an authorization for a district judge to assume the role of Attorney General.
Subsequent cases in the D.C. Circuit cling to this standard to assure that courts don’t bother with the “public interest” determination.
Congress reacted, and in 2004 changed the Tunney Act to compel a public interest determination. The legislative history expressly and in detail decried the D.C. Circuit’s caselaw (and cited my work with John Flynn, thank you very much).
The D.C. Circuit and its district courts flat out ignored the amendment, choosing to resurrect its “mockery of judicial function standard.” As the D.C. Circuit explained in a 2016 Speedy Trial Act case:
As we have since explained, we “construed the public interest inquiry” under the Tunney Act “narrowly” in “part because of the constitutional questions that would be raised if courts were to subject the government’s exercise of its prosecutorial discretion to non-deferential review.” Mass. Sch. of Law at Andover, Inc. v. United States, 118 F.3d 776, 783 (D.C.Cir.1997); see Swift v. United States, 318 F.3d 250, 253 (D.C.Cir.2003). The upshot is that the “public interest” language in the Tunney Act, like the “leave of court” authority in Rule 48(a), confers no new power in the courts to scrutinize and countermand the prosecution’s exercise of its traditional authority over charging and enforcement decisions.
The basis of the Court’s decision was a misguided notion that failing to enter a consent decree—inherently a judicial function—trampled the DOJ’s prosecutorial discretion under Separation of Powers. It did not consider that forcing a consent decree down the throat of the court also presented separation-of-powers problems. Nor did the Court explain why it is permissible for courts to reject criminal plea bargains without separation of powers problems, yet they must accept consent decrees for the rich and powerful. And while not all of the cases are in the DC Circuit, the vast majority are, and other circuits rely on DC Circuit caselaw and experience. Only one Tunney Act consent decree rejection. Ever.
So, here we are.
The question arises, then, about what exactly would it take to create a mockery of the judicial function?
We don’t know, quite frankly. There does not appear to be much, if anything, out there to suggest what mockery of the judicial function would look like sufficient to reject a consent decree under the Tunney Act.
Prior deals under Tunney Act review have been rubber stamped
Nothing raises eyebrows with the courts when it comes to the Tunney Act. Consider a couple of examples.
In 2008, the DOJ brought a broad and sweeping complaint against American Airlines’ acquisition of U.S. Airways. But politics played a role, according to Propublica: “People were upset. The displeasure in the room was palpable,” said one attorney who worked on the case. “The staff was building a really good case and was almost entirely left out of the settlement decision.” One of the reasons they might have been upset is that President Barack Obama’s former Chief of Staff was now Mayor of Chicago and advocating for the merger at the White House.
In another airline merger, an attorney representing the merging parties became DAAG after the merger won DOJ approval in August of the same year. Sometimes the revolving door in antitrust just spins just that fast.
Even if the courts did awaken to such questions, there is little interest in doing anything about it. One might claim that Judge Leon did a heroic Tunney Act review in CVS-Aetna, but I do not think that the D.C. Circuit precedent left him in a good position to do anything other than accept the decree.
In other circuits, it is possible (but not likely) for a court to reject a consent decree. For a rare (and non-merger) exception, see U.S. v. SG Interests I, Ltd., 2012 WL 6196131 (unpublished opinion rejecting entry of consent decree in a Sherman Act Section 1 collusive bidding case as settling the case for nothing more than “nuisance value”).
Parties have also been known to close deals even before the Tunney Act review has been completed. Judge Leon complained of this practice in CVS-Aetna, but again, the D.C. Circuit caselaw leaves little in the way of judicial action.
Thus, I imagine that courts will continue to do what they have always done—ostrich-like abdication of their powers.
The Tunney Act won’t save civilization, democracy, or even antitrust
Is there a problem with Paramount making a major settlement with Trump and firing Colbert and then having its merger with Skydance approved? We’ll never know, because the courts will only review the complaint, the competitive impact statement, and the proposed final judgment. And rubber stamp.
The HPE-Juniper deal also raises serious questions related to the role of lobbying and whether the DOJ’s acquiescence has precious little to do with separation of powers and prosecutorial discretion and more to do with gangster antitrust. As the Wall Street Journal reported, “Hewlett Packard Enterprise made commitments, not disclosed in court papers, that called for the company to create new jobs at a facility in the U.S., according to people familiar with the matter.” This, if true, ought to be sufficient to reject the consent decree. But I doubt it. While SCOTUS is hard-core killing Chevron and administrative law, it seems totally fine with the extreme level of deference the DOJ gets under the bastardized interpretation of the Tunney Act.
As David Dayen pointed out, there’s a friendly district court judge in the HPE-Juniper matter, who is a former labor lawyer. And both the HPE-Juniper and the UnitedHealth Group-Amedisys matters are outside the D.C. Circuit, which is a reason for hope. Yet other cases have had friendly judges and there are still no cases rejecting a consent decree. And the reason for that is the D.C. Circuit caselaw, regardless of circuit.
How about American Express? According to the Wall Street Journal,
American Express GBT hired Brian Ballard—a longtime Trump backer, who raised $50 million for his 2024 election—to lobby the Justice Department on antitrust issues for the company, according to lobbying disclosure forms. The Justice Department last week dropped a lawsuit it had filed seeking to block American Express GBT’s acquisition of a competitor, CWT Holdings.
This raises another point. The Tunney Act is only involved when we’re dealing with consent decrees with the DOJ. There is zero transparency with respect to merger investigations that have been dropped due to Gangster Antitrust. Decades ago, there was a push for greater transparency for when the DOJ was investigating a matter, and reasoning behind closing a matter without more. That went nowhere, and we are living with the consequences of that as well. And, as administrative law falls for independent agencies like the FTC, there isn’t much to suggest that courts will get in the way of settlements at DOJ’s sister agency, either.
The future looks grim. Sure, Congress reformed the Tunney Act once already. How’d that turn out? And now, it seems unlikely that Congress (in its current sycophantic posture to the Executive Branch) would dare attempt to correct the unbridled power of the Executive Branch to sell out on the cheap or engage in Gangster Antitrust.