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When the polls close Nov. 7, most of those active in mergers and acquisitions apparently will be rooting for George W. Bush to be elected the next president of the United States. In terms of campaign donations, the investment banks, law firms and other companies most active in M&A have overwhelmingly favored the Texas governor over Vice President Al Gore. At the five most active M&A securities firms, employees gave Bush $6 for every $1 donated to Gore. Why the strong tilt toward Bush? Experts said the M&A community, like much of the business community in general, has embraced the notion that Republicans are better for business than Democrats, even if statistical data paints a far murkier picture. This belief has led dealmakers to pour more money into the coffers of Bush and his Republican party than into the accounts of Gore and the Democrats. When many in the M&A community contemplate a Bush presidency, they look at the voting record of Orson Swindle, a Republican appointee to the Federal Trade Commission who has been skeptical of several high-profile antitrust investigations. They expect Bush to appoint more commissioners who are philosophically aligned with Swindle. Had Swindle his way, Exxon Corp. would not have been forced to sell hundreds of East Coast gasoline stations to win regulatory approval to acquire Mobil Corp. He argued in a dissent that the commission should have left alone stations in moderately concentrated markets rather than require their sale. The agency also would never have blocked the merger of the country’s four largest drug wholesalers into two companies, it never would have prosecuted Intel Corp. for abusing its monopoly position in computer chips and it never would have alleged that McCormick & Co. violated the Robinson-Patman Act by charging supermarkets different prices for spices. To be sure, Swindle and FTC Chairman Robert Pitofsky, who led the majority in backing all four enforcement efforts, would agree on the vast bulk of the 2,000 to 2,500 mergers that pass through the agency each year. Yet on the controversial transactions, the Democratic Pitofsky and the Republican Swindle have decidedly different philosophies. One is more activist, the other far more cautious in using antitrust laws to derail deals. Electing Gore means continuing the current antitrust enforcement regime while choosing Bush results in a retreat from some of the Clinton administration’s more aggressive stands. “The election matters at the margins,” said Mary Lou Steptoe, an antitrust lawyer who is on sabbatical from the Washington office of the Skadden, Arps, Slate, Meagher & Flom law firm. “Whichever party is in control, there will still be a big core of antitrust work that will go on. It is the cases at the edges that might get pushed one way or another by the outcome.” WHY DO DEALMAKERS SUPPORT BUSH? The support for Bush comes even though there is little historical evidence to show that the M&A world does better during Republican administrations. For instance, filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 rose 189 percent during President Reagan’s eight years in office. But they leapt 164 percent in the Clinton years. But calculated another way — looking at the total number of deals filed in each administration — Clinton is the big winner. There were 28,052 deals filed from 1993 to 2000, compared with 13,463 from 1981 to 1988. Department of Justice statistics dating to 1970 show that the Clinton and Nixon/Ford administrations brought a similar number of antitrust cases in U.S. district court. The Clinton administration’s high-water mark was 21 cases in 1999 while Nixon’s Justice Department brought 24 suits in 1971. Under Ford, the low-water mark was three suits, compared with a low of five in 1993 under Clinton. President Carter is often considered a major antitrust revivalist, yet his Justice Department brought just 32 cases in his four-year term. Much of the M&A pro-Republican support may date to the Reagan-Bush years, when the number of cases brought ranged from four in 1981 to eight in 1982. But Cornell University professor Alfred Kahn said some of the biggest antitrust settlements ever were during the Reagan years, including the resolution of the IBM case and the break-up of AT&T Corp. And another lawyer argued that Bush was a major antitrust enforcer. “Ronald Reagan did the biggest reverse in antitrust policy,” one Washington lawyer said. “But some of the most far reaching changes in favor of antitrust enforcement came under the Bush administration. The question is, will George W. be more like his daddy or like Ronald Reagan?” WHERE DO THE CANDIDATES STAND ON ANTITRUST? So far, the younger Bush has given little indication where he stands. Antitrust policy did not come up in the three presidential debates or the one vice presidential debate between Democrat Joseph Lieberman and Republican Dick Cheney. “If you look at the public statements, there have been none,” said Ky Ewing, chairman of the American Bar Association’s antitrust section and a partner in the Washington office of the Vinson & Elkins law firm. “If you call their policy staffs, they have not focused on it.” A search of the Bush campaign Web site finds one comment, though — an April 3 statement on the Microsoft Corp. case. “As president, I will fully enforce antitrust laws to foster competition and innovation, to protect consumers and to guard against anti-competitive conduct,” Bush said. Bush went beyond the boilerplate language of this statement in a recent CNBC appearance, in which he talked about the prosecution of Microsoft. “I will tell you this; I have always stood on the side of innovation over litigation,” Reuters quoted Bush as saying. “I think that some fundamental questions ought to be asked: Are the customers being harmed and is innovation being stifled?” Even though innovation was just what the prosecution was trying to enhance, Bush’s comments were widely interpreted as indicating that he opposes the prosecution of Microsoft and is more willing to let high-technology industries evolve without strict antitrust oversight. Insights into a Bush antitrust regime also come from campaign adviser Timothy J. Muris, a George Mason University law school professor. Muris told ABA’s antitrust section in July that he supports much of the Clinton administration’s antitrust agenda, which he said has been far less aggressive than he anticipated. CHANGE ON THE HORIZON? Yet Muris and other Republicans at the ABA meeting predicted some changes. One of the biggest could come on remedies, where a Bush antitrust regime is expected to back away from recent demands that corporations identify buyers for divested assets up front. Bush’s team also is more likely to accept the sale of a hodgepodge of assets, instead of requiring companies to divest entire divisions or operating units. Muris singled out three cases where he said the Clinton administration overreached. None involved mergers. In one involving Toys “R” Us Inc. and Price Club, Muris said Toys “R” Us did nothing wrong in trying to protect its business while the FTC charged in court that the threat to stop carrying some toys was anti-competitive. Also questioned was the FTC’s decision to sue Intel Corp. for refusing to share technology with a company that had sued it and the prosecution of AMR Corp. for using predatory pricing to kill low-fare competition. Muris said the government should not use the antitrust laws to prevent dominant companies from responding to threats. GORE’S PLAN More vocal has been Gore, who discusses competition policy in his 189-page economic plan. “When monopolies, cartels or unfair practices stifle competition, artificially inflate prices and hurt consumers, the entire American economy — and all Americans — suffer,” the vice president writes. “Al Gore and Joe Lieberman believe in an antitrust policy that is supported with effective enforcement and that maintains the line between market power legally and fairly obtained and that gained illicitly.” This includes a pledge to “reduce concentration in agribusiness.” Farmers have complained for several years about a string of mergers among seed companies, suppliers and processors which, they argue, give agribusiness the power to demand below-market prices for crops and livestock. Gore pledged to support creating a permanent special counsel in the Department of Justice to work on agribusiness mergers, to bolster the power of the Department of Agriculture and DOJ to enforce the antitrust laws, and to expand laws that require the disclosure of prices paid for farm goods. The vice president also appears to support requiring cable companies to provide access to rival providers of Internet access and content. This is the primary issue in the America Online Inc.-Time Warner Inc. merger. “This is so that any company can provide any service to any customer and so that market forces rather than government regulation can prevent anti-competitive and anti-consumer behavior,” Gore wrote. THE COMPETITION IS FIERCE The differences on competition policy — combined with the Texas governor’s broader tax-and-spending plans — has been enough to secure Wall Street squarely in the GOP’s corner. Morgan Stanley Dean Witter & Co. — the investment bank ranked recently by The Daily Deal as the most-active M&A adviser — tells the story. Employees there donated $17 to Bush for every $1 to Gore, according to Federal Election Commission records. The tale was similar at Merrill Lynch & Co., Goldman, Sachs & Co., Credit Suisse First Boston and Salomon Smith Barney Inc. These firms, which round out the top five on The Daily Deal list, gave substantially more to Bush than Gore. The major law firms that advise on deals similarly favor Bush. Skadden, Arps advised on 56 deals this year and its employees gave Bush $7,250 compared with $2,000 for Gore. This occurs even though Skadden Arps is one of the law firms President Clinton has used to defend him in several scandals. Second this year with 40 deals is Wilson Sonsini Goodrich & Rosati, whose employees gave Bush $5,250 compared with $1,000 for Gore. Davis, Polk & Wardwell, ranked third with 31 deals, gave Bush $2,000 and Gore $1,025. IT’S NOT JUST M&A The tilt toward Bush and the Republicans extends well beyond the top M&A firms. The Center for Responsive Politics found that securities and investment firms gave $57.8 million in the 2000 election cycle, 59 percent of which went to Republican candidates and groups. Companies active in M&A also were big Republican donors, the Center for Responsive Politics found. The biggest contributor — defined as PAC contributions, soft money, and donations from employees, officers and directors — was AT&T, which acquired MediaOne earlier this year after a tough fight with the Federal Communications Commission. It gave $4.3 million, 62 percent of which went to Republicans. Microsoft — involved in an antitrust fight with the Justice Department, gave 54 percent of its funds to Republicans. Verizon Communications, formed this year by the merger of Bell Atlantic Corp. and GTE Corp., favored Republicans 63-37. The oil industry, which has undergone extensive consolidation, is squarely behind Bush and Cheney, both of whom used to be in the petroleum business. It gave $18 million to the GOP against $4 million to the Democrats. BP Amoco Inc. favored Republicans 55 to 45 while Exxon Mobil Corp. split 87-13. Chevron Corp., which this month announced its acquisition of Texaco Inc., gave Republicans 68 percent of its donations. The M&A world should know in just over a week whether this investment will pay off. Copyright (c)2000 TDD, LLC. All rights reserved.

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