On July 6, 2017, QVC announced its intent to acquire the remaining 62 percent of Home Shopping Network it doesn’t already own. More so than DraftKings or Walgreens, this transaction will demonstrate whether Trump’s election has had any effect on antitrust enforcement, and should be watched carefully. HSN and QVC are very similar, and the ability to do the deal will turn on what product market definition wins the day. A very broad product market definition, that focuses on means of distributing products to consumers, and that includes the Internet, will suggest the transaction will have very little effect on competition, and should be allowed to close. A narrow product market definition that focuses, say, on television shopping as a unique form of entertainment to consumers, and therefore a unique channel in which to sell products, may very well result in a challenge.
Both DraftKings and Walgreens were announced in the Obama administration and the majority of work on those cases were done by Obama hires. DraftKings involved two fantasy sports sites that were very close substitutes. That suit does reflect a narrow “liberal” and pro-enforcement view of competition but is more properly ascribed to the Obama administration than as a harbinger of things to come in the Trump administration. Walgreens was not a win for the FTC. Walgreens “abandoned” the reportable transaction after a significant price reduction and inked a new deal for half the, likely better, stores, at a fraction of the price. Walgreens will not take on the debt, and the structure of the new deal forecloses a great deal of the arguments the staff were making against the deal.
HSN and QVC are very similar platforms, much like DraftKings and FanDuel. But they are also like the XM/Sirius and Adobe/Macromedia deals a Republican administration let through without any changes. These products are highly specialized and highly competitive against each other but have few substitutes. Much like QVC and HSN. This deal was announced during the Trump election, with Ms. Ohlhausen at the helm of the FTC. It will very much be a Trump administration investigation, and may very well end the way of XM/Sirius and Adobe. Will staff, still largely Obama holdovers, investigate as vigorously and put together as thorough a case as they would have had the Commission been filled? Will the outcomes in Alarm.com and Cintas dampen staff enthusiasm and make bring a suit more difficult? The key for individuals interested in this transaction will be to watch the product market narrative in the press to see whether it leans toward the broader “it’s ecommerce silly” outcome, or if there are folks persuasively arguing that televised sales entertainment is a relevant market. The key will be the advertisers on the channels—do they view the two as substitutes.
You can already see this argument in the deal’s press release. Greg Maffei, QVC’s parent’s President and CEO stated that “[w]e are excited to announce the acquisition of HSNi. The addition of HSN will enhance QVC’s position as the leading global video eCommerce retailer. Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platform.” (Emphasis mine.) I’m sure the parties do not use the word “ecommerce” in their internal documents. The information about linear channels and OTT is designed to suggest these other platforms compete with live television and that entry in these distribution channels is low.
Ultimately, if the agency’s “no action” press release emphasizes the lack of challenge because there is “lots of competition from the Internet,” we are back in Bush-style antitrust enforcement. If there is a consent (although I’m not sure what one would look like) or challenge, then I think one could legitimately conclude there may not be a Trump effect. At least until the permanent heads of the agencies are in place and the Commission is filled.