Biden’s former antitrust adviser thinks regulators might block the “partnership.” Congress is investigating.
Sara Morrison is a senior Vox reporter who has covered data privacy, antitrust, and Big Tech’s power over us all for the site since 2019.
The golf world was rocked last week by news that the PGA Tour, Europe’s DP World Tour, and Saudi Arabia’s controversial LIV Golf plan to merge. Or, as the PGA Tour put it, “unify the game of golf.” PGA Tour commissioner Jay Monahan — who as recently as a year ago was using the 9/11 attacks, carried out mainly by Saudi citizens, to criticize PGA Tour players who had jumped to LIV — framed it a little differently: “take the competitor off the board.”
The entities involved haven’t finalized the terms of the deal and it will need approval from various stakeholders, like the PGA Tour’s board of directors, before it can go forward. Already, one senator, Richard Blumenthal (D-CT), who chairs the Senate Permanent Subcommittee on Investigations, signaled that he has some major reservations about the deal. Less than a week after it was announced, the senator wrote to the PGA Tour and LIV Golf requesting that they send records and communications about the deal to the subcommittee, saying in both letters that it “raises concerns about the Saudi government’s role in influencing this effort and the risks posed by a foreign government entity assuming control over a cherished American institution.”
There may be another hazard up ahead: antitrust regulators, who have generally taken a more adversarial stance on corporate consolidation in the last several years. They might not be thrilled with the game (and business) of golf being “unified” … or a commissioner who expressly said the deal would mean less competition.
Tim Wu is a Columbia law professor who’s one of the leaders of an antitrust reform movement that would like to see US competition policy go back to its pre-1980s roots, when antitrust regulators and enforcers took a more oppositional stance to big mergers and corporate consolidation. He’s pretty doubtful that antitrust authorities will approve the deal. knows what he’s talking about, especially considering he’s a former competition adviser to President Biden who helped shape the administration’s policies regarding competition, including authoring the sweeping executive order designed to promote it.
Vox asked Wu to elaborate on some of those points and make the case to Americans who don’t watch golf for why this proposed merger should be important to them. This interview has been lightly edited for length and clarity.
Sara Morrison
Does antitrust law cover sports?
Tim Wu
Yes. It’s a business.
Sara Morrison
Is this a merger? The PGA Tour is now calling it a “partnership.” What’s the difference?
Tim Wu
No one knows how the deal will be structured (maybe not even the parties who agreed to it). But if the result — whether a merger or a partnership — is an agreement not to compete, the antitrust law will care. The law doesn’t care what you call it.
Sara Morrison
Why should Americans who don’t follow golf or sports care about this?
Tim Wu
Three reasons:
First, I think there’s a question of public sovereignty. It’s illegal to merge to monopoly. For the Saudis and the PGA to so brazenly flout that raises basic rule-of-law questions. In other words, I think people should want to know that the laws will be enforced even if the Saudi government has lots of money.
Second, what we have here is mostly a labor case. While professional athletes may not be the most sympathetic workers, the fact is that when employers merge, employees usually get hurt. Many may not care if a pro-golfer makes less money, but there are other employees as well, and the principle of defending employees against mergers that will hurt them.
Finally, Saudi Arabia buying and controlling a major American sports league matters as just a matter of geopolitics — these are significant assets, and who controls them matters for propaganda and other purposes.
Sara Morrison
Sen. Mitch McConnell says it’s “not a governmental concern.” Why wouldn’t it be a governmental concern?
Tim Wu
It is an irresponsible thing to say and he’s wrong. Congress made monopolization a “government concern” back in 1890 when it passed the Sherman Act. So I don’t know why he’d say that unless he is trying to pressure law enforcement, which is also wrong.
Sara Morrison
The US has two antitrust enforcers, the Department of Justice and the Federal Trade Commission. Which one will handle this?
Tim Wu
The Justice Department.
There also is an outside chance that another entity, the Committee on Foreign Investment in the United States, might take a look too. They’d be looking for national security concerns, including those related to data collection. To be sure, national security isn’t so obviously implicated by the buying of a professional sports league as it is in the buying of a semiconductor firm. But that said, sports leagues are valuable media properties, and the US has traditionally been concerned about foreign ownership of major media properties.
Sara Morrison
What will DOJ’s considerations be when reviewing this merger and deciding whether or not to block it?
Tim Wu
As I said, no one knows what the “partnership” will actually look like. However, PGA Tour Commissioner Jay Monahan gave a hint when he said a benefit of the deal is “to take the competitor off the board.”
For that reason, I think a big question will be similar to the JetBlue-American Airlines alliance that was just blocked: Is the “partnership” actually a merger? More generally, does it “eliminate competition”? If the answer is yes, then the deal may be dead on arrival, but I think the Justice Department will want to have a sense of what this will mean for players and for media buyers.
Sara Morrison
Does the fact that there was already an investigation into the PGA Tour’s allegedly anticompetitive actions against LIV mean anything? Or is it a clean slate?
Tim Wu
It means they have a head start.
Sara Morrison
LIV Golf didn’t even exist just a few years ago. Does that make this merger any less of an antitrust issue, since it’s not a longtime competitor leaving the space? Or is it more of an issue, since it could also be seen as the PGA Tour almost immediately quashing a competitive threat?
Tim Wu
I think it can be spun both ways, but it looks an awful lot like the elimination of an upstart competitor. It is one of the classic antitrust stories: established monopoly faces upstart challenger; eventually both parties recognize it would be better for them to stop competing and split the profits. But the law doesn’t let you do that.
Sara Morrison
Is there a labor issue? Many in the antitrust reform movement — including the Biden competition executive order — have said that competition concerns need to include the impact on labor. One thing the PGA Tour was not happy about was how LIV lured golfers away with the promise of much larger purses. So there’s a real possibility that golfers will get less prize money once LIV is no more.
Tim Wu
This would probably be brought as a labor case. The blueprint for bringing this as a merger case would be the recent blocking of the Random House/Simon-Schuster merger. The Justice Department sued on the theory that fewer buyers of authorial labor would hurt authors, and won on that theory.
Sara Morrison
Do you think the DOJ will sue to block this? What about the UK and Europe?
Tim Wu
It does depend on how the deal is structured. But if it is a straight-up merger to monopoly there may be an [international] race to block it. The UK authority has been aggressive.
Sara Morrison
The DOJ and the FTC have made it pretty clear that they’re taking a stricter approach to mergers and competition than the agencies did under the last several administrations. And we have the Biden executive order, which you had a lot to do with. Yet we’re still seeing companies attempting these massive, even audacious mergers: JetBlue/AA, JetBlue/Spirit, Microsoft/Activision, Spirit/Frontier, Penguin Random House/Simon & Schuster. Are they not taking the FTC and DOJ seriously? Or is there an assumption that they’ll be okay in the courts?
Tim Wu
I think it takes a while for the industry to adjust. Many have gotten used to enormous paydays and golden parachutes during the “green light” era and don’t easily change their habits. Say you have a multimillion-dollar golden parachute waiting for you [if the merger goes through] — wouldn’t you want to try rolling the dice?
But of the deals you mentioned, two are already blocked, and the rest are in trouble. So it may take a few more hard knocks — old habits die hard.
Sara Morrison
Has the Biden administration accomplished what you thought it could or should on competition, or has it fallen short? What is left to do that can reasonably be done before the end of his first (or only) term?
Tim Wu
I think we’ve done great! Antitrust had become an overly technical backwater — and now has returned, in my view, to the forefront of a national conversation about the economy and how it should be structured. Having the president involved in setting antitrust policy is a big deal, historically taking us back to FDR’s approach. So I feel that we’ve definitely changed the conversation, changed the institutions, and have begun to change the case law. What more could you want?
As for what comes next: This is a big topic, but over the rest of the term the administration should keep bringing good, big, winner cases, block bad mergers, and institutionalize the leadership and positions at the White House Competition Council. That’s just a matter of appointing staff to the Council, which I hope they’ll do soon.
Sara Morrison
We had antitrust bills last session in Congress and most of them didn’t go anywhere. They probably have an even worse chance with a split Congress. Are you optimistic that we’ll get anything from Congress? And do you think the FTC and DOJ have what they need to do the job if not?
Tim Wu
I’ve long thought it important that antitrust revival not depend on Congress. Waiting for Congress — assessing your success by congressional action or inaction — is a big Washington trap. The fact is that Congress is no longer capable of doing what supermajorities of voters want, but has become an undemocratic body. So yes, it would be nice if Congress were to pass new antitrust legislation; it would also be nice if Congress would fix American health care, reform immigration laws, pass a privacy law. It is good at spending money, but that’s it. These issues are all too important to waste time with Congress’s offer to hold the football so Charlie Brown can kick it.
The fact is Congress did act and gave enormous powers to the agencies in 1890, 1914, 1936, and 1950, not to mention the powers it gave to the Department of Transportation, United States Department of Agriculture, Surface Transportation Board, and many other agencies. I have more faith in returning to what Congress asked for when passing those laws than sitting around hoping this Congress can overcome its many dysfunctions.
Update, June 12 at 12:45 pm ET: This story, originally published on June 9, has been updated with the news of Sen. Blumenthal’s probe into the deal.
