WHEN: Today, Tuesday, November 13, 2018
WHERE: CNBC's "Squawk on the Street"
The following is the unofficial transcript of a CNBC EXCLUSIVE interview with U.S. Assistant Attorney General for Antitrust Division Makan Delrahim and CNBC's David Faber on CNBC's "Squawk on the Street" (M-F 9AM – 11AM) today, Tuesday, November 13th. The following is a link to video from the interview on CNBC.com: https://www.cnbc.com/video/2018/11/13/department-of-justices-antitrust-chief-on-regulating-big-tech.html.
All references must be sourced to CNBC.
DAVID FABER: Welcome back to "Squawk on the Street." I'm David Faber here on the floor of the New York Stock Exchange. I'm very excited to introduce our guest this morning, Assistant Attorney General for the Antitrust Division: Makan Delrahim, a man I have not seen since we were together in the spring at the Milken Institute Annual Meeting. Very nice to have you for an official interview here this morning. And, Makan, let me get right to it. I can't remember a period of time, certainly, in the recent past where we've had more discussions, at least, both at the executive level by the president, but generally speaking as well, about the power of big business, in particular the power of some of our key technology companies. You're no stranger to what's going on in the news from your perch at the Department of Justice. How seriously do you think about "the power of big," if I could put it that simply, and what it actually means from an anti-trust perspective?
MAKAN DELRAHIM: Well, we've discussed this before. You know, one of our roles in the anti-trust laws is to make sure that the – you know, when companies get big – and we want to – we don't have any problem with companies being big, it's when they get big, they behave properly. And to make sure that the markets are open; that new entrants enter in, new competitors and ultimately the consumers and businesses will benefit from that.
FABER: I'm sure you may have seen this article. Interestingly -- there's been lots of good press for our interview, not to mention the president which we'll get to. But Tim Wu, a law professor that specializes in anti-trust, New York Times editorial this weekend, talked about Congress passing the Anti-Merger Act of 1950 but he also said, "It would be understandable if you assumed [it had been] repealed. But it remains on the books. It has merely been evaded, eroded and enfeebled by the corroding effect of decades of industry pressure and ideological drift, yielding" what he says is, "hesitant enforcers and a hostile judiciary." How do you respond to criticisms like that?
DELRAHIM: Well look I respect him quite a bit. He's great. He has been very thoughtful. He has been certainly thoughtful on the At&T/Time Warner Merger that we challenged. I don't think there has been much hostility. I think the laws have been pretty well calibrated. Do we have challenges? Absolutely. But I think those are good challenges and checks and balances on our powers. We go to the court system. We have to prove our case. We have to prove it with good, strong evidence. We also have to prove it with sound economics. And over the last 30, 40 years, we've had pretty strong and bipartisan consensus on the -- what the balance, and the right balance for anti-trust enforcement is. Now, are there areas that, you know -- do we wish he'd go a different way? Are there cases we lose? Absolutely.
FABER: Right. But do you agree with his contention then, and I'll read here, that "there's a direct link between the concentration of business and the distortion of the democratic process"?
DELRAHIM: I don't think so. We have to be vigilant, make sure. That's why the anti-trust laws were enacted in the first place, to make sure that no single company or group of companies have the inordinate amount of power. That affects our lives. And there's been quite a bit of debate about these platforms, and what does that mean? Are they touching every aspect of our lives? Should they be this big? Should the government step in and somehow regulate their growth? And I think – you know, the anti-trust –
FABER: How close do you look at that issue when it comes to, in particular -- and again, we're talking about platforms, whether it be Amazon, Facebook or Alphabet, the existence of these enormous platforms and the influence they have? How seriously do you investigate it right now at the Department of Justice in terms of trying to get some answers?
DELRAHIM: Well, we look at it. Whenever there's been challenges, we have -- the Justice Department brought a case on the eBooks matter not too long ago – just a couple of years ago, where some publishers and Apple had gotten together and successfully resolved that matter. We are constantly – what we look at we have to be careful in that we're just there to police the markets, we're not picking winners and losers. We are not trying to choose which technologies -- frankly, we're just not smart enough to be doing that. All we can do is make sure that markets are free for new entrants to come in and topple the old ones.
FABER: And do you believe that's the case right now? I mean, we've had this discussion previously but this idea that innovation is somehow it's stymied by these giants who can conceivably presumably prevent capital flowing to new ideas because nobody wants to fund anybody getting into business to compete with them?
DELRAHIM: Well, I don't know if that's true. I don't know if there's actual evidence of that. There might be in certain areas, certainly different investors. But it seems like Silicon Valley and the venture capital world, in this country in particularly, is alive and well. You're having new companies pop up, every now and then. But that's what we do. Anti-trust laws need to be there to make sure that they do not prevent the next competitor to come in. That was exactly what the justice department did in Microsoft 20 years ago. And a lot of people were worried about the power Microsoft had, and particularly when they were trying to suffocate the internet browser because it was challenging their monopoly power in the operating system. And I think that case probably led to a lot of the innovation we're seeing today.
FABER: How do you respond to the president's tweets? I'm sure you hear about them if you don't read them directly. Yesterday, American Cable Association has big problems with Comcast, our parent company, by the way. They say that Comcast routinely violates anti-trust laws. When you see or hear something like that, what's your reaction?
DELRAHIM: Well, look, the previous administration you know, brought an anti-trust case against Comcast when they bought NBC and settled it in a decree that just expired in September. We have been vigilant, and I think I owe that to the American consumer to continue to make sure the markets are working, despite the expiration of any consent decree. You know, I have - one of the things I've been both criticized and, I think, praised for is that I don't believe these behavioral consent decrees as a solution to these mergers. We come in and tell a company to withhold its natural tendencies, its natural incentives to make a profit and then they evaporate after five, seven, ten years. And it makes no sense. Because seven years before we're trying to guess where the market is. I believe in structural solutions. That's what we've suggested. We thought that's what it is --
FABER: -- that's why you went after AT&T/Time Warner, the vertical merger that it was.
DELRAHIM: Exactly. Yeah. Well only portions of it, not the whole merger. But the area where there was anti-competitive concern. And that was the solution we had provided. But that is one. But I think it's great that you know, you have the Administration, you also have members of Congress who are all very vigilant about anti-trust enforcement. And Comcast in particular, as well as At&T and other media because they affect so many Americans' lives.
FABER: But when the president writes, and this is from this summer, "In my opinion, The Washington Post is nothing more than an expensive lobbyist for Amazon as it uses protection against anti-trust claims, which many feel should be brought." Again, as the man who runs enforcement for the anti-trust division, when you hear something like that from the executive, is there a response that you have?
DELRAHIM: Well, we hear that from executive and legislative. I mean, by the way, these types of concerns raised about Amazon are bipartisan. And Senators raise them, the president has raised it. It's -- again, I think it's great that we have such a debate about free markets and the anti-trust laws there to protect the free markets. As far as what we do in our enforcement, you know, we need the evidence, we need the economics, we go to court. And politics, you know, that goes on between various aspects of the government don't affect our decisions to make these cases.
FABER: In the couple of minutes we have left, Makan, let me hit a couple of quick things: Time Warner/AT&T, when are you actually going to go to court again?
DELRAHIM: The Court of Appeals in D.C. will be hearing the oral arguments December 6th. The parties, we had agreed with them to hold the Turner assets separate until the end of February and so they're supposed to be running that business a little bit separately so that in the event the court of appeals overturns the district court's decision as we argued -- and I think they should --
FABER: I know you think they should. Whether or not they will –
DELRAHIM: Well, I think there's been a lot of support for our appeal. You know, you had those – the 29 or so economists, law professors, some of the country's biggest experts who supported our case because, frankly, the court's decision, and the lower court's decision had real serious flaws in economic logic. And so we'll see what happens there. If it does – but we hope there will be a decision before the end of February and then we'll take it from there.
FABER: Talking about timelines. Can you give us any sense as to when the Department of Justice will complete its review of T-Mobile and Sprint's deal?
DELRAHIM: A lot of times, these mergers, the parties control the timing – about the number of documents they provide. And in that particular transaction, we also – we're reviewing it, but also the Federal Communications Commission has a role in that transaction and I believe there's been a -- what they call the time clock over at the FCC for 180 days that has been stopped. I don't believe that has been restarted. So our timing will coincide together. I don't know exactly when it is, but, you know, I announced a number of reforms with the hope that if the parties cooperate with us, we'll be moving things forward and we hope to get every transaction reviewed within six months.
FABER: Before going to three in the most important market for most people when it comes to the bill they pay, some would say simple violation of anti-trust law.
DELRAHIM: Well, yes, except for simple violations of anti-trust law require evidence and the economics. So, we're reviewing the evidence in this case and if that's what the economics and the evidence shows, that it would substantially lessen competition, we would sue to block it. But if it doesn't, I don't think we have a magical number for any particular industry, which is what I've said in the past.
FABER: Does leaving an enfeebled competitor worry you to act – sort of figure into your decision making? In other words, the idea that Sprint wouldn't ever be able to compete if it was truly left independent?
DELRAHIM: That would certainly be one of the considerations that goes into a number of factors we would review to see, you know, what would happen to the competitive landscape. Does that -- what you're insinuating, does that mean there's only be then two competitors if this merger doesn't happen -- and one of them would fail or both of them might fail without this merger? Those would be factors we would consider. But I don't know if the evidence fully supports that.
FABER: And, finally, your future. Some say, well, there's an opening now for Attorney General of the United States. Would you be interested?
DELRAHIM: I have the best job, I think, in the government, running the anti-trust division. It's the job that I wanted. And I think the president has made a superb choice, as Deputy Rod Rosenstein said, in Matt Whitaker the acting Attorney General in the meantime. And I think there's gonna be a process, so I'm looking forward to see who will be the next AG. But as far me personally, I love the anti-trust division and I have the best job in the country.
FABER: Well we appreciate your taking some time to talk about it with us.
DELRAHIM: Thank you for having me.
FABER: Makan Delrahim joining us. Back to you guys.
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