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Late on Monday, the D.C. Circuit Court of Appeals heard from 27 antitrust scholars, various public interest groups and the American Cable Association, who all contend that the judge who oversaw the big trial over the merger between AT&T and Time Warner committed a reversible error by concluding the tie-up isn’t likely to lessen competition by increasing the merged company’s bargaining leverage in licensing negotiations for CNN, TBS and TNT.
The Federal Communications Commission also submitted an amicus brief with a somewhat unique spin.
During the trial, Justice Department lawyers hoped that one of the biggest knocks against the merger would come from AT&T. Specifically, the government wished to use AT&T subsidiary DirecTV’s comments to regulators about Comcast’s prior acquisition of NBCUniversal. The DOJ saw these comments as “admissions” that a vertical merger can have harmful marketplace impact, while AT&T and Time Warner argued these statements weren’t relevant since they came before AT&T acquired DirecTV.
U.S. District Court Judge Richard Leon concluded that prior regulatory filings were “somewhat probative,” but added that because AT&T and DirecTV “acted as competitors to (or customers of) distributors whose competitive positions would be affected by FCC review,” he was “hesitant to assign any significant evidentiary value to prior regulatory filings.”
The FCC takes umbrage with this assessment.
“The district court’s apparent hesitancy on this point is misplaced,” states the amicus brief from the FCC. “To the contrary, the Commission’s rules require all regulated parties — whether applicants seeking to transfer licenses in connection with a proposed merger or competitors who oppose the merger — to abide by the same standard of truthfulness in adjudicatory proceedings.”
In its brief, the FCC says it is not taking a position on the merger — AT&T and Time Warner dodged a review of its merger before the communications regulator — but tells the appeals court “there was no reason for the district court to treat those comments as less credible simply because AT&T and DirecTV were ‘competitors’ of the merger applicants in those proceedings.”
In its appellate brief, the Justice Department nodded to Leon’s decision to discount past regulatory filings but spent more ink on the judge’s shortchanging of its economics expert.
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