Biden becomes dealmakers’ no fun police

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NEW YORK, June 22 (Reuters Breakingviews) - U.S. President Joe Biden was meant to bring predictability to the antitrust environment after a tumultuous four years. But the government agencies who patrol mergers and acquisitions are wielding some big sticks, and it’s hard to tell where they will strike next.

On Monday, the Department of Justice crowed that Hollywood power brokers Ari Emanuel and Mark Shapiro of Endeavor (EDR.N) left the board of Live Nation Entertainment (LYV.N) after it raised concerns the two companies competed too closely in the sports and entertainment markets. The rebuke isn’t unheard of – regulators probed the boards of Alphabet (GOOGL.O) and Apple (AAPL.O) in 2009 and found director overlap. Yet it’s rare, and the target in this case, with a market capitalization of just $19 billion, is relatively small.

Other agencies have been putting companies on notice. Earlier this month, the Justice Department sued to block Aon’s (AON.N) $30 billion acquisition of Willis Towers Watson to prevent two of the big three global insurance brokers from combining. The Federal Trade Commission is challenging the $7.1 billion merger of biotechnology firms Illumina (ILMN.O) and Grail (GRAL.O).

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Biden’s recent appointment of Lina Khan to head the FTC is another totem that the administration is keen to push the boundaries in novel ways. Khan has been vocal about broadening the definition of anti-competitive behavior, looking beyond just how consolidation affects prices to other factors, like control over consumer data.

Dealmaking was chaotic under Donald Trump’s administration. While regulators sued to thwart AT&T’s (T.N) acquisition of Time Warner, the former president’s dislike of cable news network CNN colored the motivation. The FTC and DOJ cracked down on vertical mergers, after having remained untouched for more than 35 years. But the application of enforcement was haphazard. T-Mobile US (TMUS.O) was allowed to swallow Sprint, reducing the number of telecommunications choices, and ultimately AT&T’s deal for Time Warner got done.

On Tuesday Reuters reported that the FTC was going to review Amazon.com's (AMZN.O) proposed $8.5 billion deal for Hollywood studio MGM. It’s the first tryout for Khan, who rose to prominence when she wrote an influential article about Jeff Bezos’s firm and antitrust. For Wall Street, that means more months of holding their collective breath just as the Biden administration become dealmakers’ no fun police.

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CONTEXT NEWS

- The Federal Trade Commission will review Amazon.com’s $8.5 billion purchase of MGM movie studio, according to Reuters on June 22.

- The U.S. Department of Justice said on June 21 that Endeavor Chief Executive Ari Emanuel and President Mark Shapiro resigned as directors on the Live Nation Entertainment board after the department expressed antitrust concerns.

- The regulator cited the Clayton Act, which prohibits the same person to serve as an officer or director of two competing companies.

- Endeavor is an entertainment and talent company that owns sports franchises, such as Ultimate Fighting Championship, and promotes live events. Live Nation is concert producer and ticket seller.

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