While the Microsoft-Yahoo deal is still up in the air, we've heard from various analysts in recent few weeks that a key obstacle to the merger could be a democratic presidential administration.
Conventional wisdom is that a democratic administration would treat a transaction of this size with more scrutiny than a republican administration. (Interestingly, about 68 percent of Microsoft's political donations in the 2008 election cycle have gone toward democrats, according to OpenSecrets.org, while the remaining 32 percent went to republicans.) Although it's a reasonable hypothesis, it's misplaced, according to economists and business school professors.
"Data suggests there really is no difference between democrats and republicans in their zeal for antitrust enforcement," says Craig A. Depken II, an associate professor of economics at the Belk College of Business at the University of North Carolina at Charlotte. "Historically, there has been a perception that democrats are more like 'populists' who are quicker to jump on anticompetitive behavior. It's pure political rhetoric. It actually requires a lot of data analysis. It's much easier for people to say, 'Oh, republicans are in the back pocket of big business.' But when you look at case filings, there aren't that many differences [between the two parties.]"
The more important factor, according to Depken, is the economic climate.
"Antitrust filings tend to go up when the economy is strong," Depken says. "When the economy isn't doing well, you see antitrust filings drop."
Depken argues that Ronald Reagan, who helped cultivate republicans' reputation as hands-off in the antitrust department, inherited a recession when he won the presidency and was therefore less likely to pursue antitrust cases.
"I would argue that economists are running the show most of the time anyway," says B. Espen Eckbo, a professor of finance at the Tuck School of Business at Dartmouth College. "Antitrust has evolved so there's less intervention overall -- even under Clinton."
Photo: Flickr/skippy13
