Big deals are waiting on the tarmac as Wall Street and the business world anticipate how the presidential election will change antitrust enforcement.
President Biden has taken an aggressive approach to policing deals that some have called overreaching and others have lauded as a necessary return to scrutiny on the power wielded by big business. Dealmakers say they are holding some deals back in hope of a more lenient approach in the next administration.
Doha Mekki is on the ground executing the strategy. She’s worked at the Justice Department under three administrations: as a trial attorney during the Obama presidency, in the front office during the Trump presidency and now as the principal assistant attorney general under Jonathan Kanter.
In a recent interview at the Penn Carey Law Antitrust Association’s annual symposium, DealBook talked with Mekki about the department’s big wins and losses, and what could be in store if Biden gets another four years. This interview has been edited and condensed for clarity.
You led the lawsuit that successfully blocked JetBlue’s acquisition of Spirit Airlines (the decision is under appeal). In a case like that, how do you weigh the risk that a company will fail because it’s too weak on its own against the risk of a more consolidated industry?
There’s a whole doctrine in antitrust that deals specifically with firms that are financially not viable. And it bears noting — and certainly the court noted — that the company did not make that argument. In fact, what Spirit, I think, projected to its shareholders for a long time was that they still intended to grow.
But a company probably does not want to make the case in court that a deal is life or death, because it likely doesn’t want to signal that to shareholders.
I am probably contractually obligated to say you should always be honest.
Several firms, including JPMorgan Chase, dropped out of the Climate Action 100+ this week, citing antitrust concerns among other reasons. Some regulators abroad have protected green initiatives from antitrust enforcement. Should the United States do the same?
We have a 130-year-old first antitrust law, and a Clayton Act that’s about 110 years old, and nowhere in that statute are we permitted to take into account noneconomic considerations. And that is a good thing, because we as an agency are not really set up to make those judgments.
Would a deal promising a more diverse board or management be looked at more favorably?
We are pretty clear that we have no capacity to take into account those kinds of considerations. To the extent that there’s any suspicion about the agencies elevating or being less scrutinizing of these kinds of deals, it is, in fact, the opposite. It is actually the companies putting forward these social values that they intend to promote through their deals. And we’re often saying: “Thank you, but no thank you. We can’t consider that.”
If President Biden is re-elected, what will be at the top of the agenda?
This year will be business as usual. We have investigations that we’re really excited about. We have potential enforcement actions that we’re really excited about.
How are you assessing the success of the past four years?
We’ve re-engaged with the actual law, as written by Congress and interpreted by the Supreme Court and the courts of appeals. We’ve had concerns that the law has really been disintermediated by policy goals and preferences that really can’t be justified by textual reading of the statutes and the case law.
Is the fact there are fewer deals a sign of success?
Overall, I would be curious how much of it is antitrust enforcement versus the macro-environment.
Anecdotally, the number of deals with antitrust hair is also down — and that’s good for everyone. And it’s also allowed us to pursue a heftier conduct docket, which is a really important part of the agency’s mission.
You’ve also had some high-profile losses. Will that change your willingness to litigate?
It’s important how we are losing. I’m not aware of a time when we have lost squarely on the law, even in cases like UnitedHealth Group-Change, where we had not previously pursued a competitively sensitive information theory of harm. The theory stood, right? We’ve tended to lose on how persuasive we are on our facts.
We take that feedback in stride and internalize it and try to make better arguments in the future. I think you see it in Penguin Random House-Simon and Schuster, where we leaned into stories about how mergers hurt authors and threaten to harm whose ideas get published. You see it in JetBlue-Spirit.
We prefer to win — no doubt. But those hard lessons have really made us better, and we’re going to continue to be better storytellers because that’s our obligation to the public. — Lauren Hirsch
IN CASE YOU MISSED IT
Nvidia leapfrogged Alphabet and Amazon, making it the third-largest U.S. listed company with a market capitalization of roughly $1.8 trillion. Its shares have climbed nearly 50 percent this year, adding roughly $560 billion to its market valuation since Jan. 2, as investors bet it will reap huge profits from building the chips that power artificial intelligence services.
Elon Musk continued his flight from Delaware. The billionaire moved the incorporation of the privately held SpaceX to Texas after a judge in Delaware voided his nearly $56 billion payday at Tesla. It remains unclear whether Tesla itself will be able to make the same journey.
OpenAI unveiled a new video tool called Sora, which generates high-quality videos from text prompts. Investors remain eager to pour money into generative A.I. companies. On Friday, The New York Times reported that OpenAI had completed a deal with Thrive Capital that values it at $80 billion or more, nearly tripling its valuation in less than 10 months.
Why you’re still talking about that Dunkin’ ad
A week after the Super Bowl, the marketing industry is still raving about the ad Dunkin’ ran during the game and its many spin offs. (In case you’ve been living under a rock: Ben Affleck tries to impress Jennifer Lopez with a cringe-y song and the help of his sidekicks, Matt Damon and Tom Brady.)
Dunkin’ has peppered the internet with bonus content, like footage of Affleck failing to catch a pass from Brady (Dunkin’ told DealBook that was unscripted) and a collaboration with the social media influencer Charli D’Amelio. The brand is selling pink-and-orange tracksuits inspired by the one Affleck wore and has released the full song, “Don’t Dunk Away at My Heart.” All told, the campaign has amassed more than 12 million YouTube views.
“We believe this widespread buzz highlights the ad’s ability to not only capture but sustain the audience’s attention,” Jill Nelson, Dunkin’s chief marketing officer, told DealBook in an email, adding that the company sold more doughnuts on Valentine’s Day this year than on any other day in its history.
The campaign demonstrates how marketing around the big game has changed.
“There’s an immense power in using the Super Bowl as a nucleus,” Derek Rucker, a professor at Northwestern’s Kellogg School of Management who studies effective advertising, told DealBook. With the average 30-second Super Bowl ad slot running $7 million, brands are looking to seed campaigns on other channels like social media, in-store promotions and other ads.
It’s easier to start selling a branded Dunkin’ tracksuit if millions are already in on the Ben-Jennifer plot. “You have a large base of people who understand ‘Phase A’ of the campaign,” Rucker said.
Talent increasingly has skin in the game. Artists Equity, the production company Affleck and Damon founded, handled just about every aspect of the campaign. (Affleck and Getty Cardinal, the founder of RedBird Capital, spoke at DealBook’s conference in 2022 just after they announced the company.) When Artists Equity started, the actors said they intended to give talent a cut of the profits.
The concept behind the Dunkin’ ad was initially pitched as part of a commercial to run during the Grammys. Dunkin’ liked the idea so much “it inspired us to turn the narrative into two distinct chapters and make a Super Bowl ad,” Nelson said. (In the Grammys ad, Affleck reveals his aspiration to become a pop star.)
“Some of the most compelling content didn’t even make the final commercials because we reserved it for social media,” Nelson added.
Four things we learned from “Supercommunicators”
What is it that makes some masters at delivering feedback, problem solving or communicating strategy? In “Supercommunicators,” which releases on Tuesday, Charles Duhigg answers that question, drawing on decades of research.
“Supercommunicators aren’t born with special abilities — but they have thought harder about how conversations unfold,” he writes. Here are four lessons from the book:
The right question can demonstrate that you’re listening. A key to developing an emotional connection are “deep questions that delve into values, beliefs, judgment or experiences,” Duhigg writes. (Think “what’s the best part of your job?” instead of “where do you work?”).
You can also demonstrate your understanding by asking questions, summarizing what you’ve heard and asking if you got it right, a technique called “looping.”
The aim of conflict conversations is to understand, not win. It helps to demonstrate understanding through “looping”; acknowledge points of agreement; and talk in specifics rather than sweeping statements.
Effective online discourse requires a new approach. The discourse in letters and phone conversations has evolved. “We’ve developed norms and nearly unconscious behaviors — the lilt in our voice when we answer a phone; the sign-off in a letter signaling our fondness for the reader — that make communication easier,” Duhigg writes.
He’s hopeful that online communication will develop similar norms, like being extra polite and avoiding sarcasm and criticism.
Difficult conversations need structure. Duhigg suggests establishing guidelines; sharing your goals for the conversation, and asking others to share theirs; and acknowledging discomfort is expected, and OK.
Quiz: Startups wanted
The partners at Y Combinator, the start-up accelerator that incubated Airbnb, Dropbox and DoorDash, have published their latest “request for startups,” a wish list of the kind of companies in which they’d like to invest.
Which of these startup categories did not make the list?
Find the answer at the bottom of this newsletter.
Sarah Kessler contributed reporting.
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Quiz answer: B.
