11:25am PT by Eriq Gardner
AT&T to Appeals Court: No Clear Error in Decision Allowing Time Warner Merger
On Thursday, AT&T and Time Warner told the D.C. Circuit Court of Appeals in a brief that there's no good reason to unwind the mega-merger between the companies on antitrust grounds.
The Justice Department is pursuing the appeal after U.S. District Court Judge Richard Leon handed down his judgment in favor of defendants on June 12. The government was unable to prevail on its contention that the merger would lead to hundreds of millions of dollars more in annual consumer payments for Time Warner networks including TNT, TBS, and CNN.
The government is bringing to the appeals court the issue of whether Leon ignored economic logic in blessing the merger, but without any "clear error," AT&T and Time Warner say the judgment must be upheld.
"A wealth of evidence at trial — much of it from DOJ’s own witnesses — refuted DOJ’s prediction that the merger would enable Turner to raise its wholesale prices," states the brief. "DOJ therefore portrays a prediction based on Nash bargaining theory as an ineluctable fact compelled by the laws of economics and ignores key evidence disproving that prediction. These tactics provide no basis for overturning the district court’s finding on this point."
The brief is fairly direct without much surprises, although AT&T and Time Warner do nod at the start to the political context of the case.
"The Department of Justice’s suit to block the transaction was the United States’ first litigated challenge to a vertical merger in four decades, prompting many press outlets to question whether the White House had improperly influenced DOJ’s decision to bring the case," states the brief. "The district court, however, quashed discovery into that issue, effectively limiting the trial to the fundamental question of whether DOJ had met its burden to prove that the proposed combination violated Section 7 of the Clayton Act."