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Hell or High Water: A new Trumpian mode of analysis, and what it means for Shutterstock/Getty

  • A new frame of analysis is needed for Trump’s enforcement disposition
  • Willingness to bend agencies to achieve broader administration objectives key
  • Shutterstock/Getty deal carries with it traditional risk, as well as potential retribution against Koch family

Hell or High Water is a weekly column that offers commentary from our editorial team on the main deals undergoing regulatory reviews as well as the broader enforcement environment. The opinions expressed here are those of the writer only. 

As President Donald Trump ascends to the highest office in the land (again), the M&A universe is set for dramatic changes, and indeed, has already begun to adapt.

Deals that were relegated to desk drawers are being revived. Political appointees’ public comments are being scrutinized. Tech icons are kowtowing. And, in turn, our regulatory analysis must also evolve.

The fairly straightforward method of analysis for antitrust reviews that prevailed during the Bush and Obama years was reconsidered when Trump took office as the 45th president and then upended during the Biden administration’s enforcement experiment.

In the era of Biden’s neo-Brandeisian revival, with an emphasis on expanding regulatory powers, it was incumbent on us dealwatchers to consider whether a merger provided an opportunity to explore novel theories of harm or expand case law. We did the traditional analysis and then got creative. Might labor markets come into play? Rebate programs that were not merger-specific? Serial acquisitions punished?

With Trump Part Deux, even though largely expected to be more business-friendly, we must also consider the unique disposition of the man himself, and his willingness to hijack regulatory agencies to bend corporate activity to his will.

The 2016 TimeWarner/AT&T matter stands as a case study for our exercise. Anecdotes in antitrust circles suggest that Trump largely chose his Department of Justice (DOJ) antitrust chief at least partially due to his willingness to oblige Trump’s desire to go after that deal. Trump was said to have knives out for the deal due to animosity towards how he was covered by TimeWarner subsidiary CNN. His public comments attacking CNN president Jeff Zucker stand as a record of that conflict.

The analysis of his approach should continue to include those personal considerations and should be extended to include things like political donations, whether either of the merging parties or their leadership have benefited or harmed Trump historically, as well as whether those companies can help advance Trump’s political or industrial objectives.

In that vein, let us turn to the recently announced – and highly contentious – merger between Shutterstock and Getty Images [NYSE:GETY] as an early case study for Trump’s approach to antitrust enforcement.

To set the scene, the merger should be considered a prime candidate for enforcement action. Getty is the leading player in the field, and Shutterstock is one of its closest competitors, with Adobe also included in the market.

Beyond the high market shares associated with the 3-2 union, the most acute theory of harm may be a labor monopsony claim. Photographers who furnish images to stock photo providers would see two of their primary options for placement combined and are already sounding alarm bells. It appears royalties paid to those photogs have been diminishing, commensurate with consolidation in the industry. This looks akin to the Penguin Random House/Simon & Schuster merger that the DOJ successfully blocked in 2022.

And there is an ominous deal track record to boot. In 2010, the UK’s Office of Fair Trading began proceedings to prohibit Getty’s acquisition of Rex Images. Getty eventually walked away from the transaction, only to see Shutterstock come back five years later and successfully acquire the smaller UK-based competitor.

If the acquisition of that bit player was a problem in 2013, the industry must have changed significantly for the companies to believe they could make a significantly larger acquisition, which includes the already-verboten asset. And maybe it has, maybe artificial intelligence has disrupted the industry, but the companies are not telling investors that, and have not begun to spin that narrative to the M&A press. Believe me, I’ve asked.

From a traditional antitrust lens, the deal already carries with it significant antitrust risk.

On to Trump, and the new method of analysis.

Late Wednesday night, Trump acerbically stated that he would not accept any personnel in his administration who had worked for a list of specified foes. On the list was Charles Koch, the billionaire businessman once aligned with Trump, who turned face and emerged as an anti-Trump force in this last season’s campaign. The damaged relationship is a matter of public record.

The Koch family happens to be the second largest holder in Getty Images, through its Koch Equity Development vehicle. You see where this is going…

The already-troubled deal that has antitrust experts scratching their heads as to how this might pass muster happens to have as one of its chief beneficiaries a declared enemy of an incoming president who has a history of using his regulators to target perceived enemies.

This is not a good situation for the deal’s prospects, but it will be a telling test case for the new reality facing the deals community.