AAI has filed Tunney Act comments urging the District Court for the Northern District of California to conduct additional discovery before considering whether it can approve the Department of Justice’s controversial settlement allowing the merger of Hewlett Packer Enterprise Co. (HPE) and Juniper Networks, Inc. (Juniper).
After suing to block the HPE/Juniper merger in January, the Department of Justice (DOJ) reversed course in June, agreeing to settle the merger only twelve days before trial in exchange for a combination of structural and behavioral relief. For a variety of reasons, the settlement is controversial. Most notably, two of Assistant Attorney General Abigail Slater’s top deputies were fired after reportedly opposing it. Last month, one of the deputies, Roger Alford, delivered a speech revealing numerous troubling developments, including that political appointees in the Justice Department overruled the experts in the Antitrust Division after a lobbying campaign by the merging parties. According to news reports, Assistant Attorney General Slater herself opposed the settlement.
Under the Antitrust Procedures and Penalties Act (APPA), more commonly known as the Tunney Act, DOJ settlements embodied in consent decrees must meet certain requirements before being entered by a court. First, the DOJ must file a Competitive Impact Statement (CIS) and Proposed Final Judgment (PFJ) with the court. The public then has a 60-day period to comment on the settlement. After the public comment period, the DOJ must file a response to public comments, along with the comments themselves, with the court. The court must then determine whether entering the consent decree is in the public interest. The Tunney Act authorizes the court to conduct additional discovery, including to hold hearings, appoint a special master, take witness testimony, appoint consultants and experts, and hear from amici curiae, before determining whether the settlement is in the public interest.
AAI’s public comments argue that the CIS does not fulfill the DOJ’s Tunney Act obligation to provide “an explanation of any unusual circumstances” giving rise to the PFJ. Most immediately, it does not address the credible allegations of Alford, who was the second-highest ranking official in the Antitrust Division. Specifically, it does not address the overruling of the Antitrust Division, the firings, or the reports of extensive lobbying activity by non-antitrust lobbyists.
Moreover, the DOJ’s complaint expressly states that the merger “should be blocked,” which signals that it believes the merger is incurable using remedies. The CIS does not explain what led the DOJ to reverse this substantive conclusion. Although news reports quoting DOJ spokespeople have said the reversal was motivated by a desire to strengthen HPE’s international competitiveness for national security reasons, that approach would contravene longstanding DOJ policy holding that protecting and promoting domestic competition—rather than stabilizing or reducing it through anticompetitive mergers—is the best way to promote international competitiveness. Moreover, the CIS itself undermines that justification by asserting that the settlement would effectively remedy the merger’s anticompetitive effects. If the remedy will do what the CIS claims it will do, then it will not strengthen HPE’s hand internationally.
AAI’s comments also identify and explain omissions in the DOJ’s recitation of legal standards governing public interest review under the Tunney Act. The CIS fails to meet the Tunney Act’s reasonableness standard because it fails to provide a factual foundation for its prediction that the proposed remedy will lead to entry or repositioning, which itself contravenes the complaint’s allegations that entry and repositioning are not viable.
Finally, AAI’s comments review the legislative history of the Tunney Act, which had its origins in a Nixon administration scandal in which lobbyists persuaded White House officials to overrule Antitrust Division experts. AAI argues that the Tunney Act was made for cases like one, because it ensures disclosure of information to the public though fact discovery when there are (1) unusual circumstances giving rise to the consent decree; (2) public reports of extensive lobbying activity and credible allegations that government antitrust specialists were overruled; and (3) a remedy proposal that is facially dubious because it lacks a factual foundation.
The comments were written by AAI President Randy Stutz, with assistance from AAI Vice President and Director of Legal Advocacy Kathleen Bradish and AAI Senior Counsel David O. Fisher.
Read the full comments here: AAI Tunney Act Comments
