AT&T Case Vaults Antitrust Chief From Obscurity to Spotlight

(Bloomberg) -- Makan Delrahim was virtually unknown outside the insular world of antitrust law until he dropped a bombshell lawsuit this week to block AT&T Inc.’s megadeal to buy Time Warner Inc. The outcome is likely to establish him either as a bold enforcer or someone in over his head.

Delrahim was working under President Donald Trump in the White House counsel’s office before he went to lead the Justice Department’s antitrust division in September. Some thought he lacked the antitrust chops that many predecessors have brought to the job. A longtime lobbyist steeped in the ways of Capitol Hill, he didn’t have the hands-on merger experience of antitrust attorneys at elite firms wrangling deals for corporate clients.

They underestimated him. Weeks after moving into his new job, he has upset the traditional approach to merger enforcement with one of the biggest deal challenges of the last decade. AT&T said the lawsuit “defies logic and is unprecedented.”

“It’s surprising that he came out swinging,” said Chris Sagers, a professor at Cleveland-Marshall College of Law, who argued that Delrahim will be seen as an aggressive enforcer because of the case. “Win or lose, Makan will be remembered well for this.”

The risk, however, is that a loss could hamper the government’s efforts to block similar deals in the future that wed companies that don’t compete directly.

Delrahim is already looking to shake things up further, pushing for reviews that could alter historic government antitrust settlements that have shaped industries such as music and movies for decades.

Poker Enthusiast

Born in Iran to parents who moved to California following the Shah’s fall in 1979, Delrahim, who is 48, didn’t speak English at first and worked at his father’s Los Angeles-area gas station. A poker enthusiast, Delrahim is described by those who know him as a keen strategist.

He completed an undergraduate degree at UCLA before earning a law degree from George Washington University. He began his career in Washington, working on intellectual property rights for the office of the U.S. Trade Representative and served as chief counsel for the Senate Judiciary Committee when it was chaired by Republican Senator Orrin Hatch of Utah. This year, Hatch helped shepherd Delrahim through a drawn-out confirmation that drew opposition from Democratic Senator Elizabeth Warren of Massachusetts, among others.

“There were voices suggesting he wasn’t disinterested enough, independent enough, or open-minded enough, to make the tough calls that the antitrust division requires,” Hatch said in a statement Monday after the lawsuit against AT&T was filed. “Those in doubt learned otherwise.”

Lawsuits Chilled

From the Senate, Delrahim moved to the Justice Department under George W. Bush, where he was a deputy assistant attorney general working on international and appellate matters. During his stint there, the antitrust division lost its lawsuit to stop Oracle Corp. from buying PeopleSoft. That blow triggered a chill in merger lawsuits that wasn’t reversed until the Obama administration.

Delrahim left the Justice Department in 2005 to take a job in private practice at Brownstein Hyatt Farber Schreck LLP, where he represented companies doing deals. He worked on transactions including Anthem Inc.’s agreement to buy Cigna Corp., which the Justice Department blocked earlier this year, and Google’s purchase of DoubleClick.

In 2006, Delrahim squared off against AT&T, lobbying Congress on the $86 billion merger of AT&T and BellSouth Corp. for EarthLink Inc., an internet-service provider that opposed the deal, according to public filings with the Federal Communications Commission. He also lobbied against AT&T’s failed bid to buy T-Mobile US Inc. for the Coalition for Mobile Wireless Competition, a group that included satellite-TV provider Dish Network Corp.

Delrahim is a loyal Republican. He donated $23,000 to the party’s candidates last year, including presidential hopefuls Marco Rubio, Ted Cruz and Trump. In a March 2016 op-ed for the New York Post, he implored fellow Republicans to put aside their misgivings and vote for Trump, saying the president’s control over Supreme Court nominations was too important to cede to Democrats.

He was brought into the administration by White House Counsel Don McGahn, a friend from their days at former Washington law firm Patton Boggs LLP. After Trump took office, Delrahim handled the nomination of Neil Gorsuch to the Supreme Court.

Warren Block

Delrahim’s confirmation sailed through the Senate Judiciary Committee on a vote of 19 to 1 but stalled after Warren blocked it from moving ahead in August. Warren criticized his work on behalf of companies, saying he would make the industries he represented even less competitive. After her block was lifted, Delrahim was confirmed by a vote of 73 to 21.

Ironically, by opposing the AT&T deal, Delrahim has taken up a cause that both Trump and Warren support.

Now in control of the antitrust division, a unit made up of lawyers, economists and other staff, Delrahim is busy putting his mark on the unit. He’s brought on a team of deputies heavy with litigation experience, including Andrew Finch from Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Donald Kempf, a former Marine who was chief legal officer for Morgan Stanley and an antitrust litigator at Kirkland & Ellis LLP. The deputy seen as having the deepest experience in merger investigations is Barry Nigro, who came from Fried, Frank, Harris, Shriver & Jacobson LLP and was previously a deputy at the Federal Trade Commission.

In moves some considered aggressive, Delrahim’s team sued Parker-Hannifin Corp. after it closed the acquisition of Clarcor Inc., saying it created an illegal monopoly in aviation fuel-filtration systems. The Justice Department also slapped a fine on General Electric Co. for not disposing of its water products business as quickly as it agreed to when it won approval for its merger with Baker Hughes.

Rethinking Settlements

Delrahim also is broadly rethinking how the antitrust division handles settlements. In a speech in Washington Nov. 16, he criticized agreements that let companies merge if they agree to follow certain conditions in their operations after the transaction. These agreements require antitrust enforcers to act as regulators, which they’re not, he said.

He plans to examine about 1,300 consent decrees that the Justice Department has entered into with businesses to see to what extent they are still effective. One is the 1941 agreement the government made with Ascap and BMI, the two leading agencies that collect royalties on behalf of songwriters. The department pressed for changes in their operations last year, recommendations the two organizations are resisting. The 1948 Paramount case, which resulted in major movie studios being barred from owning theaters, could also be revisited.

“My favorite is the one pertaining to music rolls,” he said in his speech to a roomful of the city’s antitrust lawyers, “still protecting consumers against the ills of anticompetitive behavior in the mechanical organ market.”

--With assistance from Bill Allison and Rob Golum

To contact the reporters on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net, Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Crayton Harrison at tharrison5@bloomberg.net.

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