Wednesday, 12 Dec 2018
Business

It's not looking great for the Justice Department's appeal of the AT & T-Time Warner merger

The Justice Department urged a federal appeals court Thursday to reconsider AT & T's $ 85 billion acquisition of Time Warner, arguing that the approval of the deal in June misunderstood fundamental economic principles and ignored how AT & T could unfairly extract higher fees from rivals by threatening to black out popular TV channels.

The Department of Justice delivered oral arguments in its appeal of a lower court decision that the agency has a major defeat in one of the most closely monitored antitrust trials in decades. The blockbuster case – the first time since the Nixon era that the government has gone to court this type of deal each other.

"A threat of blackout would allow them to compete with their rivals," said Attorney General Michael Murray. But the three-judge appeals panel was quick to push back on the government's case, questioning how to lower the court properly to siding with AT & T.

"Judge David Sentelle of the U.S. Court of Appeals for the D.C. Circuit told the government's side. "You have to show that you are going to have a greater impact on the competition." Judge Judith Rogers also expressed skepticism as she prodded the government's case.

AT & T attorney Peter Keisler said the company is prevented from blacking out programs, since it has pledged to allow distributors to pursue arbitration if a disagreement arises. He argued this commitment undercut the government's case. The company "has relinquished the source of the government's identified power, in its view," he said.

Rogers and Judge Robert Wilkins both asked for a blackout in a programming dispute. "We are absolutely committed to this," Keisler said.

A spokesperson for the Justice Department, Jeremy Edwards, said in a statement to The Washington Post: "The Department of Justice appreciates the court's attention to this important case and will await the court's decision."

AT & T did not immediately respond to requests for comment.

Antitrust Officials insist that AT & T's tie-up with Time Warner is counterproductive because of the newly established competitor's position, and ultimately it is important to them. But Judge Richard Leon of the U.S. District Court for the District of Columbia, who ruled in favor of AT & T this summer, said the Justice Department failed to show that the deal would harm consumers or market competition.

Through the purchase of Time Warner, AT & T is a popular media brand, including CNN and HBO. In the appeal, AT & T argued that the deal would be tailored to the needs of the customer. AT & T also said that it could build a competitive digital platform to challenge the dominance of Google and Facebook.

As corporations, the outcome of the AT & T-Time Warner appeal could be either a massive green light or a rethinking of business plans. For antitrust regulators and the court system, a ruling in favor of AT & T may hamper efforts to more aggressively apply antitrust laws to mergers.

"Andrew Schwartzman," said Andrew Schwartzman, a lecturer in public interest law at Georgetown University. "If the government will make this case it will be a precedent that will make it very hard for future enforcement for vertical mergers."

Critics of the AT & T deal say that consumers have much to lose if it proceeds. "This is a very important case, because it is more likely that it will be cheaper and more secure. "Said Gene Kimmelman, President of Public Knowledge, a consumer advocacy organization that opposes the merger.

After a short period of time in the following months, the back side of the case will be reconsidered. They can also appeal to the Supreme Court. AT & T has been pledged to manage Time Warner 's assets as a separate business unit only until Feb. 29, or if the appeals process concludes before then. A ruling against the company could eventually reverse the merger.

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