The whistleblower testimony came from John Elias, a career antitrust enforcer who served under one Democratic and two Republican presidents, and, full disclosure, was my chief of staff when I was the acting associate attorney general at the tail end of the Obama administration. Elias later was chief of staff under Makan Delrahim, Trump’s assistant attorney general for antitrust.
The purpose of antitrust law is to protect consumers by ensuring that markets operate fairly — not to further other policy or political objectives. Elias detailed two examples of pressure from Attorney General William P. Barr and other senior political appointees — one conducted behind the scenes, the other with the department’s full public might — to misuse the division’s resources for improper purposes.
The stealth misuse involved a months-long, resource-intensive and self-evidently meritless investigation — conducted over the objections of career attorneys — into 10 separate proposed mergers in the cannabis industry. According to Elias, these accounted for almost 30 percent of the department’s in-depth merger investigations in all of fiscal 2019.
These deep dives typically look into mergers between businesses with large shares in markets with just a few competitors where there is a risk that consumers would have to pay more due to lessened competition. The legal cannabis trade, in contrast, is a nascent industry with many players. As Delrahim was told by career staff, not one of the 10 investigations concerned reduced competition or implicated any of the other publicly stated criteria the Antitrust Division uses to launch merger investigations.
According to Elias, when questioned last year at an all-staff town hall about why so many resources would be devoted to the cannabis industry, Delrahim blamed it on directions from his boss, noting that the cannabis industry is unpopular “on the fifth floor,” the DOJ colloquialism for the attorney general’s office.
In Elias’s account, the sham nature of these merger investigations was underscored by unprecedented instructions to the investigating staff not to take “customary fact-finding steps,” such as interviewing competitors and other third parties knowledgeable about the industry. That also made it less likely that the abuse of the normal investigative process would become public. Indeed, until Elias testified, it was not. The whole affair reeks of an effort to use law enforcement to burden an industry Barr dislikes.
In this first example of pressure from the top of the administration, the Antitrust Division leadership used secrecy to its advantage. In the second, just the opposite. In July 2019, California announced an agreement with four major auto manufacturers on emission standards that would be stricter than those desired by Trump’s Environmental Protection Agency. Both the First Amendment and extensive antitrust precedent allow competitors to reach these sorts of understandings with government agencies without violating the antitrust laws. And at first the Justice Department raised no concerns.
Almost a month later, however, Trump tweeted his opposition to the agreement. The tweets said nothing about antitrust violations. Apparently, they did not need to. The next day, according to Elias, Delrahim’s political team directed the opening of an investigation. As with the cannabis mergers, career staff questioned the legal and factual basis for the investigation.
But Delrahim pushed forward, taking the unusual step of personally writing the auto manufacturers to inform them of the investigation — thereby ensuring that the inquiry would immediately become public. Not until February 2020 did the department quietly close the investigation, having found what was obvious last August: that there was no factual or legal basis for an investigation in the first place.
How unusual is it for antitrust enforcement to be misused in this way? The last credible — and stunning — allegation of such abuse dates to the Nixon presidency, where Oval Office tapes recorded President Richard Nixon directing his deputy attorney general to find a way to end a case against the International Telephone and Telegraph Corporation. The instruction turned out to coincide with a promise by that company to contribute $400,000 to the 1972 Republican National Convention.
Antitrust enforcement has been pretty nonpartisan and merits-based since then. Until now. But it seems the misuse of law enforcement to achieve other ends is spreading throughout a once-revered department.