Judge Rejects AT&T Effort to Probe Trump Influence in Antitrust Case

(CN) – A federal judge on Tuesday rejected AT&T’s bid to force the Justice Department to release information the telecom giant says could shed light on whether the Trump administration is behind a government effort to block its merger with Time Warner.

On Nov. 20, 2017, the Justice Department’s Antitrust Division sued to enjoin AT&T/DirecTV and Time Warner from completing their planned $85 billion merger. “If allowed to proceed, this merger will harm consumers by substantially lessening competition among traditional video distributors and slowing emerging online competition,” the complaint said. “After the merger, the merged company would have the power to make its video distributor rivals less competitive by raising their costs, resulting in even higher monthly bills for American families.

But the companies, which have been working on the merger since October 2016 refused to stand down. In answering the complaint, they charged the Justice Department is engaging in “selective enforcement of the antitrust laws.”

According to the companies, they believe the challenge to the merger is not based on “any credible antitrust concerns,” but rather “because one of the Time Warner networks to be acquired, CNN, has engaged in political speech disfavored by President Trump.”

In December 2017, AT&T and Time Warner asked the Justice Department to produce documents, logs and other discovery in which the White House shared its views of the proposed AT&T-Time Warner merger to the department.

In a ruling announced Tuesday, U.S. District Judge Richard Leon said while a log of “all written communications between the White House and the Antitrust Division … apparently indicates that there were no ‘untoward’ communications” about the merger, the defendants have continued to push for additional documents, including those they may have passed between the White House and Attorney General Jeff Sessions.

The Justice Department refused to produce them.

After evaluating the arguments of both sides in the discovery dispute, Judge Leon said the companies simply haven’t met the “rigorous standard” that applies to obtaining discovery on a selective enforcement defense.

“Under that standard, defendants must put forward ‘some evidence tending to show the existence of the essential elements of the defense, discriminatory effect and discriminatory intent,'” he wrote. “If either part of the test is failed, the defense fails.”

In this case, Leon said, the “defendants have fallen far short of establishing that this enforcement action was selective.

“It is … difficult to even conceptualize how a selective enforcement claim applies in the antitrust context, where each merger ‘must be functionally viewed’ in the ‘context of its particular industry’ and in light of a ‘variety of factors’ — including the transaction’s size, structure, and potential to generate efficiencies or enable evasion of rate regulation — that ‘are relevant in determining whether a transaction is likely to lesson competition,'” he said.

Leon also reject the companies’ assertion that the Justice Department’s actions in this case are distinct from how it has treated other so-called “vertical mergers” in the past.

“As counsel for the Government explained at length during the hearing, history belies the notion that this action is the first and only time that the Government has found an antitrust problem with a proposed vertical merger or insisted on a structural remedy as a condition to settlement. … So while it may, indeed, be a rate breed of horse, it is not exactly a unicorn!” Leon wrote.

In sum, Leon said, the companies “have not made a ‘credible showing’ that they have been ‘especially singled out’ by plaintiff” and as a result, they are not entitled to an order compelling the discovery they sought.

 

 

 

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