The incoming Biden administration will meet a more amenable legislative branch, with last week’s Democratic wins in the Georgia Senate races giving the party a numerical advantage in both houses of Congress.
The dynamic would present a clearer path for the administration to pursue an agenda to increase antitrust oversight and follow through on the political momentum around potentially breaking up Big Tech; to take a more conversational approach to international trade, and to push for stronger consumer protections.
For one, the next administration’s stance toward the acquisition and competitive business practices of companies including Amazon, whose chief executive officer Jeff Bezos testified to a House antitrust panel in July, will be defined by its enforcers.
With Democrats in control, the White House is expected to face fewer obstacles to making political appointments that require Senate confirmation, including for the role of antitrust head at the U.S. Department of Justice. Makan Delrahim, the current Assistant Attorney General for the DOJ’s Antitrust Division, who was confirmed to his role by the Senate in 2017, is expected to step down from the position.
But the incoming administration is expected to formulate its own point of view on an antitrust approach, including whether the enforcement should retain its traditional focus on analyzing mergers based on their effect on prices for consumers, or to broaden its perspective to look at companies’ overall dominance in the marketplace and their power over labor conditions and wages.
It also remains to be seen who will be chosen next to chair the Federal Trade Commission, an agency which also oversees competition as part of its consumer protection mandate, and which has been Republican-controlled during the Trump years.
“There’s a lot in play, [and] any business in America right now needs to pay attention to their proposed acquisitions and business conduct, because there’s going to be a greater appetite, at least for scrutiny, if not for ultimate challenges, “ said Adam Biegel, who co-chairs the antitrust team at Alston & Bird LLP.
At the same time, the still surging COVID-19 pandemic may also complicate questions around deal practices, especially for traditional brick-and-mortar retailers.
Although companies can’t necessarily point to the pandemic to pursue anticompetitive acquisitions, some questions around competitive practices in retail may have to change, considering that the conditions of the pandemic have disproportionately hurt physical retailers as consumers have shifted to online shopping, Biegel said.
“COVID-19 is not going to justify anti competitive mergers, and the agencies have made that clear, but I think it does upend a little bit, some of the assumptions about consumer preferences,” he said.
“People have really shown I think their shopping preferences aren’t dependent on walking into a store as much, and they’ve proven that by what we’ve gone through over the past year,” he added.
“That could have an impact in retail mergers, and [companies would] be able to point to the robust online competition to justify the growth of multiple brick-and-mortar retailers combining to compete against large big box, or emerging online retailers who have been very successful, perhaps, during the pandemic.”
One of the other significant shifts that the retail industry is expecting is in the area of trade policy, a notable area of consternation for apparel retailers over the last four years, as they contended with abrupt tariff increases. The next administration is expected to take a less aggressive approach, though it is not expected to undo existing tariffs right away.
“The Biden administration is going to tread carefully and go slowly, but expect over time some of that pressure will go away and the tariffs will decrease,” said Stephanie Sheridan, who chairs Steptoe & Johnson LLP’s retail and e-commerce group.
The section 301 tariffs, which added up to 25 additional duties on Chinese imports, including apparel, are not necessarily expected to be rolled back, not quickly, anyway.
But any more increases are unlikely to follow in the same vein, and the administration’s instincts are more likely to be to negotiate with China on how to address some of those issues underlying those tariffs, including intellectual property issues and the serious humanitarian crisis of forced labor in Xinjiang, said BJ Shannon of Alston & Bird LLP.
“I think what you’re more likely to see change is — and this is why I say the change in administration is likely to make the most difference — is that what we’re hearing from the incoming Biden administration and folks he’s tapping to be in roles that are related to trade, are that we’re likely to see more of a multilateral approach and more of a collaborative approach, both with our international trading partners, and I think also between the administration, and the House and Senate,” she said.
“Instead of unilateral, U.S. primarily tariff based action, you may see more of an approach to negotiations and multilateral solutions,” she said.
The piece has been clarified to note that Assistant Attorney General Makan Delrahim is expected to step down this year.