Uptick in lobbying spending for merging companies facing antitrust scrutiny

Print More

Wikipedia

Sen. Jeff Sessions (R-Ala.), the attorney general-designate, received more than $80,000 over the course of his career from AT&T, whose merger with Time Warner is being reviewed by the Justice Department.

Quite a few corporations floated multi-billion dollar mergers in 2016, including ag leaders Monsanto and Bayer, telecom titans AT&T and Time Warner and fantasy sports giants FanDuel and Draft Kings.

And with such marriages — which undergo scrutiny by antitrust officials and often Congress, a routine part of any merger process — often comes an uptick in lobbying efforts, as the companies leave as little to chance as possible in getting their version of the story out.

“Typically when companies are set to merge, there are two phases of lobbying taking place: First, reach out to their home state members [of Congress] as a courtesy so they aren’t blindsided,” said Wiley Rein LLP partner Caleb Burns. “And two, if the merger review starts to go south, the companies can ask supportive members to help bring action to bear to encourage the approval.”

Congress sometimes elects to have its own hearings on large mergers, as it did with the AT&T/Time Warner deal in December.

(Any communication with the Justice Department or Federal Trade Commission, the two bodies that review mergers for antitrust problems, generally isn’t considered lobbying, but part of the investigation; other agencies that oversee an industry may be involved in that review as well, such as the Federal Communications Commission with telecom combos.)


Blue: 2015, Red: 2016

This crop of mergers comes with an unprecedented asterisk: The level of contact President Donald Trump seems to be having with the corporations whose deals are under review. Trump, as president-elect, met with CEOs of Monsanto, Bayer and AT&T, tweeted approvingly about Bayer’s pledge to create jobs and criticized AT&T’s proposed deal with Time Warner during his campaign. Former and current antitrust officials expressed concerns about how Trump’s activity would impact the traditionally independent investigations.

None of that counts as the sort of activity that must be revealed on lobbying reports.

That aside, though, let’s see how the companies stack up:

Bayer – Monsanto

Last September, German chemical giant Bayer AG sealed a deal to buy seed titan Monsanto for a mere $66 billion. While Monsanto shareholders approved the merger last month, there’s still the Justice Department to deal with; its lengthy antitrust review isn’t expected to wrap up till the end of 2017. Bayer also agreed to pay $2 million if the deal doesn’t clear, giving it all the more reason to push for approval.

Bayer AG spent $260,000 more in 2016 compared to the previous year, for a total of nearly $8 million. The pharmaceutical firm said it lobbied on “various issues related to proposed corporate acquisition.” Additionally, Bayer listed the 21st Century Cures Act, food labeling and pesticide regulation bills as issues it was weighing in on. The pharma company last spent this much on lobbying in 2009.

Monsanto saw a similar uptick, with a six percent increase from 2015; it spent $4.6 million last year. Monsanto didn’t mention the merger on any of its reports, but it had some other pretty big issues on its plate: insecticide regulations, the Clean Air Act and the Trans-Pacific Partnership (TPP.)

AT&T – Time Warner

Before the election, Trump didn’t approve of AT&T and Time Warner‘s $85 billion merger, saying “It’s too much concentration of power in the hands of too few.” He has since turned down the rhetoric, saying “he hasn’t seen any of the facts” of the merger to Axios (though he still accuses CNN, a subsidiary of Time Warner, of trafficking in “fake news”).

AT&T’s CFO said he expects the deal to close by the end of the year, pending approval from Justice.

AT&T, ranked No. 9 on the biggest lobbying spenders list this year, spent $16.4 million in 2016, up $1.5 million from 2015. It was the biggest lobbying year since 2012, when the telecom company spent $17.5 million in an effort to get approval for its ultimately failed attempt to merge with T-Mobile. The company’s latest filing mentioned “monitor[ing] antitrust, arbitration, compensation and corporate governance issues.”

Time Warner bumped its lobbying efforts up an additional $182,000 from 2015 to $2.9 million. It finished the year strong with $756,000, the most it spent in any quarter of 2016. It listed “Issues related to the proposed AT&T-Time Warner transaction” in its report. That’s still not as much as the $3.3 million Time Warner spent in 2014, the year Comcast attempted to buy up the cable company. (Comcast spent $17 million that year.) Comcast withdrew its offer when the Department of Justice threatened to file an antitrust suit.

At least these four companies will be seeing a friendly fact at DOJ. All four of their PACs have contributed to Sen. and Attorney General-designate Jeff Sessions‘ (R-Ala.) campaign committee and leadership PAC over the course of his career. AT&T ranks as the 9th largest donor, giving $81,700 since Sessions was elected to the Senate in 1996. More than 90 percent of those funds came from the company’s PAC.

FanDuel – DraftKings

The daily fantasy sports industry had quite a busy year. New York Attorney General Eric Schneiderman brought a lawsuit against two leading companies, FanDuel and DraftKings, arguing their games were actually illegal gambling. In the end, thanks at least in part to intense lobbying, New York Gov. Andrew Cuomo (D) signed a bill legalizing fantasy sports in August.

However, these industry leaders. suffered financial losses as a result of fighting their legal and legislative battles, and in November FanDuel and DraftKings announced their merger — out of necessity. The feds will be taking a close look, as the two make up about 80 percent of the fantasy sports market. Despite their pinched bottom lines, both sought to invest more in lobbying last year than it 2015, which was the first year they filed lobbying reports: DraftKings increased its spending by 256 percent, while FanDuel’s outlays jumped 186 percent. FanDuel and DraftKings both helpfully reported they were lobbying on “Issues related to fantasy sports.”

Anthem – Cigna and Aetna – Humana

The Department of Justice sued in June to block Anthem‘s $54.2 billion purchase of Cigna and Aetna‘s $37 billion offer for Humana. Last week a judge agreed with DOJ on the Anthem-Cigna deal, halting the merger. Many observers expect the same results when it comes to the Aetna-Humana deal.

“These mergers would restrict competition for health insurance products sold in markets across the country and would give tremendous power over the nation’s health insurance industry to just three large companies,” said former Attorney General Loretta Lynch in the release.

All four companies decreased their lobbying spending from 2015 to 2016, though all still listed the mergers as issues they lobbied on in their latest reports.

Since both duos announced their deals in July 2015, we also compared data from the second quarter of that year (April through June) and third quarter (July through September.) Three of the four increased their spending during those months, Anthem by 115 percent, Cigna by 13 percent and Aetna by 35 percent, while Humana stayed constant with $220,000 both quarters.


Blue denotes 2014, Red denotes 2015

Looking at the change between 2014, the year leading up to the mergers, and 2015, when they were announced, Anthem was the only company to decrease spending, by five percent.

Researchers Dan Auble and Doug Weber contributed to this post. 

Leave a Reply