Blocking all mergers during pandemic is ‘misguided,’ DOJ antitrust chief says

Makan Delrahim, U.S. assistant attorney general for the antitrust division, speaks during the Wall Street Journal Tech Live global technology conference in Laguna Beach, California, U.S., on Monday, Oct. 22, 2019.

Martina Albertazzi | Bloomberg | Getty Images

Makan Delrahim, the top antitrust official at the Justice Department, said Wednesday he believes a pandemic moratorium on mergers would be “misguided.”

Sen. Elizabeth Warren, D-Mass., and fellow progressive Rep. Alexandria Ocasio-Cortez, D-N.Y., have proposed “The Pandemic Anti-Monopoly Act,” which would “stop large corporations from exploiting the coronavirus pandemic to engage in harmful mergers.” It would place a moratorium on deals for companies with more than $100 million in revenue, as well as some private equity funds and hedge funds.

“We haven’t seen the legislative language, so we can’t have any official position on it,” Delharim told CNBC’s “Squawk Box” on Wednesday. “However, I think it would be misguided to just block all attempts for transactions.”

He added: “For every complex problem, there’s a very simple solution: and it’s wrong.”

Delrahim went on to say he believes some transactions may be “very necessary” at this time, to ensure that companies have liquidity and to keep workers employed. With that in mind, Delrahim said his department will not review transactions with its “head in the sand.”

That could mean allowing companies to use the  “failing firm” defense to justify a deal that may have otherwise been viewed as anti-competitive. To meet that criteria, said Delrahim, a company must prove that it is unable to meet its financial obligations or reorganize its debt through bankruptcy and has already made a good faith effort to find a less anti-competitive buyer.

When asked whether Amazon’s rumored interest in acquiring movie theater operator AMC Entertainment would fit within the “failing firm” framework, Delrahim declined to comment on the potential deal explicitly.

“The movie exhibition industry has gone through some challenges over the years, just with the high capital expense they must continue to put in, and the movie theaters have been shut down, like theme parks,” he said.

“So we would look at it again under the same three-part test – should that be a defense to the merger,” he added, noting the deal itself might not pose competition concerns under normal analysis. 

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