On the road again: Antitrust in the news
I am on the road and collecting quotes and sources for some future reporting. In the meantime, here are a few things to keep your beak wet.
I am traveling this week so, for now, just a shortie for everyone.
I am in Coral Gables, FL this week, teaching ACC626, a fraud case class, in person to the MAcc students at the University of Miami. We'll cover, as group presentations, the KPMG-PCAOB teaching case that my colleagues and I published in Issues in Accounting Education in May 2023, and then on Wednesday the students will present their ideas about what really happened at Macy's.
Last week I attended the Securities Enforcement Forum inaugural event in New York virtually and collected transcripts to check against the videos that are now out.
I heard some interesting things, which I will report out later this week and next. Those soundbites included former SEC Enforcement Director in the first Trump Administration Steve Peikin — now back at Sullivan and Cromwell — anticipate the change in authority over who can start investigations and issue a subpoenas.
Bruce Carton noted today that Reuters has reported that has now happened.
The move is among the first changes in enforcement at the SEC under the new leadership, which is expected to be friendlier to industry.
While speaking on a panel at an industry conference on Tuesday, Steven Peikin, who was SEC co-director of enforcement under Republican Jay Clayton, speculated such a change could happen under the new administration.
"I think it's a huge waste of commission resources to be focused on formal order authority," Peikin said.
Peikin made these comments at Securities Enforcement Forum New York last week on a fantastic panel called, “Trump 2.0: The Impact of the Election on SEC Enforcement.” A video of the entire panel is below and Peikin’s exchange about formal order authority begins at the 15:57 mark."
I will be writing a lot more about the Securities Enforcement Forum conference soon!
I noticed two snippets from Bloomberg about antitrust actions. In both cases they hark back to previous reporting here at The Dig.
It was a big day in the antitrust world.
According to documents reviewed by Bloomberg, the Federal Trade Commission is probing whether Uber and Lyft illegally coordinated to limit driver pay in New York City. The companies now must turn over information about an agreement with city officials over how drivers are compensated.
This is a really interesting story — gift link above — because it suggests that when Uber and Lyft entered into the agreement with New York City in July 2024 to reduce ride-share lockouts that had resulted in reduced driver pay, the agreement built in incentives for Uber and Lyft to collude. Uber's remediation was also contingent on Lyft's actions. From the press release of the agreement:
Under today’s agreement, Uber will immediately begin phasing out access restrictions for drivers using its platform, with the goal of ending them entirely by Labor Day if Lyft maintains an annual company utilization rate (the time drivers spend with a passenger) of at least 50 percent — a figure that is reduced when companies like Uber and Lyft onboard too many drivers. As part of the agreement, both companies will also pause onboarding for new drivers, as this helps to increase utilization rates and allows more work for existing drivers. Lyft will minimize lockouts as the onboarding pause continues.
In a statement to Bloomberg, "Gold, the Uber spokesperson, said there was never 'an agreement or deal' with Lyft itself. 'We were neither conspiring nor was our goal to limit driver pay,' he said."
Bloomberg now reports that the FTC, in the new Trump Administration, is looking into it.
In an announcement at the time, the New York City mayor’s office referred to an “agreement” with Uber and Lyft in a press release. That agreement could violate antitrust law if the deal allowed Uber and Lyft, which are direct competitors, to coordinate on driver hiring and pay, according to an FTC staff memo also reviewed by Bloomberg.
Olga Usvyatsky, of Deep Quarry, and I wrote about the agreement. We were looking at how Uber and Lyft disclose litigation and regulatory contingencies.
But I have always thought that Uber and Lyft are way too cozy and close and will eventually become one company. Why? Because they are both audited by PwC out of its San Francisco office. Here's what I said in Nov. 2023.
PwC Audits Uber and Lyft
One of the most fascinating aspects of the Uber/Lyft saga is the fact that they are both audited by PwC, out of its San Francisco office. That’s going to make for some very tough juggling when Uber inevitably makes a bid for Lyft. And it is inevitable.
Just look at the numbers, as Calcbench as laid out.
At first glance, Uber dwarfs Lyft in almost every way. Most notably, Uber had roughly nine times the revenue as Lyft ($9.3 billion versus $1.16 billion) and almost the same multiple on total assets ($35.95 billion versus $4.48 billion). Uber also had a positive number for net income ($219 million) which is more than we can say for Lyft (net loss of $12.1 million).
More than that, Uber also dwarfs Lyft on several non-GAAP metrics too.
It will be hard to deny that Uber had a great opportunity to peek under the hood and make the best bid, given the proximity of Lyft’s numbers, warts and all. It’s happened before, say academics.
Francine McKenna, When Acquirer and Target in M&A Talks Share an Auditor, Purchase Price Can Suffer, Market Watch, May 19, 2015 (describing findings from Shared Auditors in Mergers and Acquisitions).
Francine McKenna, Tesla’s Musk may have to justify SolarCity deal in court, Market Watch, June 23, 2016, (describing findings from Shared Auditors in Mergers and Acquisitions).
Francine McKenna, Accounting Rule Change May Lead Time Warner to Bring Billions Mode to AT&T Deal, Market Watch, Nov 8, 2016 (describing findings from Shared Auditors in Mergers and Acquisitions).
Who are the partners signing for Lyft and Uber out of the PwC San Francisco office? From the PCAOB's Form AP database.
In the same Bloomberg newsletter that mentions the FTC's Uber/Lyft investigation there's also a comment on the US DOJ, under the new Trump Administration, blocking a merger between HPE and Juniper Networks.
And the US Justice Department sued to block Hewlett Packard Enterprise’s $14 billion acquisition of Juniper Networks, arguing the tie-up would harm competition. In a complaint filed Thursday, the US said the deal would consolidate the sector from three major players—HPE, Juniper and Cisco—down to two that would control 70% of the market. (HPE’s CEO said the company would defend its planned acquisition.)
The antitrust suit marks the first brought by the Justice Department under Trump.
Asif Suria at the Inside Arbitrage newsletter also noted this action :
JNPR: The Justice Department announced that it has sued to block the acquisition of Juniper Networks (JNPR) by Hewlett Packard Enterprise (HPE). Both the companies have issued a joint response following the DOJ’s legal action aimed at blocking their merger. They stated that they would vigorously challenge what they viewed as an overreaching interpretation of antitrust laws.
Why is this interesting to me? Well, of course, because both companies are audited by EY!
I have written a lot about the phenomenon of what happens when the same auditor signs for the acquirer and the target.
Nearly ten years ago, in 2014, a team of researchers found that shared auditors are observed in nearly a quarter of all public acquisitions and that targets are more likely to receive a bid from a firm that has the same auditor. They also concluded that the targets typically get screwed on the deal because there are a lot of incentives for the auditors to help the acquirer.
Shared Auditors in Mergers and Acquisitions, August 21, 2014
478KB ∙ PDF file
Some recent deals — Cisco and Splunk (PwC), Broadcom and VMWare (PwC), AbbVie and Immunogen (EY), and a rumored tie-up between Cigna and Humana (PwC), suggest that you’ll be more successful getting a bargain deal if you listen to your auditor.
This deal is less likely to close, and the auditors probably can’t help that. At least the signatures are not coming out of the same EY office. That would have goosed the discount even more, according to the researchers, and added to the likelihood there was information leakage between audit teams.
HPE
Juniper Networks
© Francine McKenna, The Digging Company LLC, 2025