Investigation Into LIV Golf Merger Could Be Boon For National Security

It is rare that the interests of antitrust regulators and U.S. national security come together; however, the proposed merger of LIV Golf and the PGA Tour may provide a rare opportunity for the U.S. government, in the context of investigating competitive effects of the proposed merger, to learn more about the Saudi business interests that are purportedly funding the rise of LIV Golf.

Under federal antitrust law, the Hart-Scott-Rodino Act of 1976 requires companies of greater than a certain size, prior to merger, to submit paperwork and documents to the federal antitrust agencies for review. If the submitted materials spark competitive concerns from the standpoint of the agencies, either the Department of Justice or Federal Trade Commission are then allowed to temporarily halt the proposed merger by submitting a Second Request for Information. As part of the Second Request process, either agency may then request a wide range of additional documents related to competitive conditions in the marketplace, and they may also conduct investigative hearings and seek responses to specific questions in written interrogatories.

While most businesses that file Hart-Scott-Rodino paperwork never receive a Second Request for Information, the proposed merger of LIV Golf and the PGA Tour falls within the narrow category of mergers where, on competitive grounds, a Second Request seems likely. This is because the merger would either create or strengthen an existing monopoly over organized golf. Thus, the merger reasonably may substantially lessen competition within the professional golf-event hosting marketplace.

Such an antitrust inquiry, of course, may lead to the Department of Justice or Federal Trade Commission also gaining important information from a national security standpoint. As recently as January 2023, the non-profit organization Democracy for the Arab World (DAWN) called on the Department of Justice to investigate the governance structure of LIV Golf and the potential relationship between LIV Golf’s Saudi business interests, including those of Saudi Arabian Crown Prince Mohammed bin Salmon, and former U.S. president Donald Trump, whose businesses own several of the golf courses used in the LIV Golf tour. Additionally, according to various news sources, certain DOJ subpoenas in its investigations of former president Trump targeted information about Trump’s dealings with the Saudi business interests funding LIV Golf. Thus, these topics arguably may be of national security interest.

While the merger review process is not generally a review of national security, an investigation into the competitive conditions underlying the proposed merger of LIV Golf and the PGA Tour should lead to the disclosure of additional information about the financial structure of LIV Golf and its payout structure to tour operators, including the Trump Organization. An antitrust investigation into the proposed LIV Golf merger also opens the door to reasonable inquiries into when and how money flows from LIV Golf to the Trump Organization. Such answers may either increase or alleviate purported concerns of national interest.

Of course, there is always a possibility that organizers of LIV Golf and the PGA Tour will abandon their merger or try to find a way to structure a merger without making a Hart-Scott-Rodino filing. It is also possible that the federal antitrust agencies, recognizing their finite resources, choose not to file a Second Request for Information. But, if a proposed merger does indeed move forward, the merger review process may become rather uncomfortable for senior management at both LIV Golf and the PGA Tour.

In other words, the proposed merger of the PGA Tour with LIV Golf is not likely to the end the very unusual legal saga involving these two golf associations. If anything, it would merely mark the start of a new and even more curious chapter.

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Marc Edelman ([email protected]) is a Professor of Law at Baruch College’s Zicklin School of Business, Sports Ethics Director of the Robert Zicklin Center on Corporate Integrity, and the founder of Edelman Law. He is an author of “A Short Treatise on Amateurism and Antitrust Law” and “The Collegiate Employee-Athlete,” among many other articles of legal scholarship.