The week in GRC: Klobuchar seeks tougher antitrust enforcement and Biden team talks with car companies about emissions
– The Wall Street Journal reported that US lawmakers from both parties are pushing back against companies that have suspended campaign donations, arguing that the freeze unfairly punishes everyone and could undermine corporate interests. According to people familiar with the matter, Democrats friendly with business have complained to companies that they are being penalized for actions taken by Republicans challenging the results of the presidential election.
Separately, Republicans who voted with Democrats to uphold President Joe Biden’s win have told companies that cutting off their funding may harm their re-election prospects and hinder them if they are challenged in a primary by those who supported former president Donald Trump’s unfounded claim that he won the election, some of the people said.
– Reuters reported that major automakers said they were joining General Motors in dropping support for Trump’s effort to bar California from setting its own zero-emission vehicle rules. The companies, which include Hyundai Motor, Kia Motors, Mitsubishi Motors, Mazda Motor and Subaru Corp, said in a joint statement that they were withdrawing from a continuing legal challenge to California’s emission-setting powers ‘in a gesture of good faith and to find a constructive path forward’ with Biden.
The automakers and the National Automobile Dealers Association said they were aligned ‘with the Biden administration’s goals to achieve year-over-year improvements in fuel economy standards.’
The US Department of Justice Department asked the US Appeals Court for the District of Columbia to put the California emissions litigation on hold to ‘ensure due respect for the prerogative of the executive branch to reconsider the policy decisions of a prior administration.’
– The SEC said Satyam Khanna would be senior policy adviser for climate and ESG in the office of acting chair Allison Herren Lee. In this new role, Khanna will advise the agency on ESG issues and advance related new initiatives across its offices and divisions.
Khanna was most recently a resident fellow at NYU School of Law’s Institute for Corporate Governance & Finance and served on the Biden-Harris presidential transition’s Federal Reserve, banking and securities regulators agency review team.
– The SEC also said John Coates will be acting director of the division of corporation finance. Coates has been a professor of law and economics at Harvard University, where he also served as vice dean for finance and strategic initiatives and taught courses on corporate law and governance, securities regulation and finance.
– According to Reuters, ExxonMobil added Tan Sri Wan Zulkiflee Wan Ariffin, a former CEO of Malaysian state energy firm Petronas, as a new board director following investor pressure. Exxon was recently reported to be in talks with DE Shaw about changes to its board, which followed a campaign launched by newly founded fund Engine No 1, which formally launched a proxy fight and nominated four members to Exxon’s board on January 27.
Exxon didn’t disclose details, but said it is talking with other board candidates as part of a refreshment process and will take further action in the near term. The company had earlier said it has engaged with Engine No 1 since mid-December and will evaluate the fund’s nominees.
– Amazon founder Jeff Bezos will step down from his role as CEO later this year and transition to the role of executive chair, CNN reported. He will be replaced by Andy Jassy. Bezos has been the company’s CEO since its founding in 1995. Jassy has worked for Amazon since 1997 and at present is CEO of the company’s cloud business, Amazon Web Services, its biggest profit driver.
‘Being the CEO of Amazon is a deep responsibility, and it’s consuming,’ Bezos wrote in a letter to employees. ‘When you have a responsibility like that, it’s hard to put attention on anything else. As exec chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post and my other passions.’
– Reuters reported that White House domestic climate-change adviser Gina McCarthy said the Biden administration has started discussions with the utility and automobile sectors about reducing greenhouse gas emissions. The talks are part of a broad effort by the Biden administration that McCarthy will lead to engage every federal agency to decarbonize the US power sector by 2035 and the whole economy by 2050.
McCarthy’s first major task is to come up with a 2030 emissions reduction target under the Paris climate agreement before Biden convenes world leaders for a climate summit on April 22. ‘We’re already having conversations with the utility world and we’re having conversations with the car companies,’ McCarthy said. ‘The car companies understand now that the future for them is electric vehicles... so we’re going to be sort of working to make sure we move forward with some kind of an agreement on that and a strategy to get us out of the gate fast.’
– According to CNBC, Senator Amy Klobuchar, D-Minnesota, unveiled a sweeping antitrust reform bill that sets a tough tone as she becomes chair of the Senate Judiciary Subcommittee on Antitrust. Klobuchar has often criticized what she and other lawmakers have seen as lax enforcement of existing antitrust laws and has called for strong measures against some of the major tech companies.
Her Competition and Antitrust Law Enforcement Reform Act seeks to reform antitrust law in three main ways: resetting the standard for enforcement and shifting the burden of proof onto dominant companies in merger cases; requiring agencies to study markets and merger effects regularly, with the help of additional funds; and giving new tools to antitrust enforcers such as imposing civil penalties.
– CNN reported that Merck CEO Kenneth Frazier, who is one of the few black CEOs of a Fortune 500 firm, will retire in June after a 30-year tenure with the company. The pharmaceutical company named CFO Robert Davis as its new leader, effective July 1. Frazier has served as Merck’s CEO since 2011 and had made headlines in recent years for his statements on racial justice and his public tussles with Trump.
‘On behalf of the entire Merck board, I thank Ken for his strong and highly principled leadership and his commitment to the company’s core values of scientific excellence, business integrity, patient focus and respect for all people,’ said Les Brun, Merck’s lead independent director, in a statement. Frazier will remain on Merck’s board as executive chair for a ‘transition period to be determined by the board.’
– The WSJ reported that UnitedHealth Group CEO David Wichmann retired from the healthcare company. Wichmann was succeeded by Andrew Witty, the company’s president and former CEO of GlaxoSmithKline, who recently returned from a leave of absence to work on Covid-19 efforts at the World Health Organization. Wichmann will work in a transition role through March this year. He joined UnitedHealth in 1998 and had been president before assuming the CEO role.
– According to CNBC, attorneys are bracing themselves and their clients for a crackdown on white-collar crime under the Biden administration. ‘Generally speaking, there is a feeling that when Democrats are in power, there’s more activity in the white-collar world,’ said attorney Reid Weingarten, a former federal prosecutor and current partner at Steptoe & Johnson. He said there may be some justification for a crackdown given the massive amount of government aid approved in the past year to deal with the Covid-19 pandemic.
Jacob Frenkel, chair of the government investigations and securities enforcement practice at Dickinson Wright, is also telling clients to expect an uptick in enforcement more generally. ‘It is important to check your Ps and Qs. Make sure your compliance systems are effective and tested, and understand there will be accountability for non-compliant activity,’ he said.