Khan and Mekki Still Wearing Blinders When It Comes to ESG

February 23, 2024

The progressive antitrust regulators of the Biden Administration often warn their fellow C-Suite progressives that environmental, social and governance promises don’t compute in antitrust. Early in her tenure, Lina Khan took to the pages of the enemy, excuse me, I mean The Wall Street Journal, to warn companies that the Federal Trade Commission cannot use ESG to buy a little extra consideration for a merger or an acquisition.

Doha Mekki, principal deputy assistant attorney general for antitrust, doubled down on these assurances in a recent interview with Lauren Hirsch of The New York Times.

Hirsch noted that big asset managers are dropping out of Climate 100+ partly out of concerns about antitrust violations. Hirsch added that European regulators have measures in place to protect “green initiatives” from antitrust enforcement. This reporter asked Mekki if the Department of Justice was going to follow the example of Europe.

Mekki replied: “We have a 130-year-old first antitrust law, and a Clayton Act that’s about 110 years old, and nowhere in that statute are we permitted to take into account noneconomic considerations. And that is a good thing, because we as an agency are not really set up to make those judgments.”

Hirsch then asked if board diversity might prompt DOJ to look more favorably at a corporation?

Mekki: “We are pretty clear that we have no capacity to take into account those kinds of considerations. To the extent that there’s any suspicion about the agencies elevating or being less scrutinizing of these kinds of deals, it is, in fact, the opposite. It is actually the companies putting forward these social values that they intend to promote through these deals. And we’re often saying, ‘Thank you, but no thank you. We can’t consider that.’”

So far, so good. Being green or diverse or sustainable or wokeish won’t grease your merger through the review process under this administration, no sir-ree. We don’t play favorites, etc.

Except when we do.

Sure, greenwashing or DEI rhetoric won’t win a pass on either FTC or DOJ approval of a deal. But what about blatantly anticompetitive networks and businesses out in the open?

Consider Glass-Lewis and ISS, a duopoly that has a stranglehold on the proxy market. Worse, they drive ESG mandates and then sell solutions to companies to deal with these demands that they foment. Or what about the antitrust liabilities that JP Morgan and State Street saw that prompted them to drop out of Climate 100+, where a cartel of NGOs, activists and asset managers have conspired in the restraint of trade?

Why do the principled stands of Mekki and Khan only apply to prospective mergers, instead of focusing on blatant antitrust violations that are out in the open?

I await my answer. Checking email … drumming fingers … it’s getting nice outside … wonder what’s for dinner … checking email …