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Judge Denies AT&T Effort to Obtain Info on Potential Trump Influence in Antitrust Case

A federal judge has denied an effort by AT&T’s legal team to compel the Justice Department to produce information that could shed light on whether the White House influenced the Antitrust Division’s decision to sue to block the merger with Time Warner.

The decision was a setback for AT&T and Time Warner in its pursuit of a defense that they have been unfairly singled out by the Justice Department because of President Donald Trump’s hatred of CNN, one of the Time Warner divisions.

U.S. District Judge Richard Leon, in his ruling on Tuesday, wrote that AT&T-Time Warner had not met the legal threshold to show that they have “been ‘especially singled out'” by the Justice Department, and therefore could obtain records of correspondence that would shed light on how the decision to was made to try to block the merger.

Leon wrote that AT&T had not shown evidence of so-called “selective enforcement” to warrant obtaining the information and had fallen “far short” of showing that they were singled out.

On Friday, Dan Petrocelli, the lead counsel for AT&T and Time Warner, argued that what they were trying to obtain was a “privilege log” of communications involving the Justice Department’s Antitrust Division, Attorney General Jeff Sessions, and the White House.

But Leon denied the request to obtain additional written correspondence about the merger between the White House and Sessions’ office; documents between the attorney general and the Antitrust Division on the Trump administration view of the merger, and records of all oral communications between the White House and the Antitrust Division related to the merger.

“We respect the judge’s decision and look forward to the upcoming trial,” Petrocelli said in a statement after Leon’s ruling.

The trial is scheduled to begin on March 19.

Jeff Bewkes, the CEO of Time Warner, gave an extensive deposition last week in which he laid out his views on whether the decision to sue was motivated by Trump’s animus toward CNN, a unit of Time Warner. Bewkes’ deposition has not been made public, but Petrocelli noted that Bewkes’ comments on the issue ran 40 pages.

The Justice Department denies that there was anything “untoward” about the decision to sue. Its lead attorney, Craig Conrath, said AT&T-Time Warner was engaging in a “fishing expedition” to mount a defense that the decision was politically motivated, and he warned that the discovery dispute could delay the trial. He also said AT&T-Time Warner had yet to meet the legal threshold to mount such a “selective enforcement” defense.

Petrocelli argued that the AT&T-Time Warner merger was just the type of “vertical” transaction that has secured the DOJ’s green light in recent decades, in contrast to more problematic “horizontal” mergers that overtly remove competition from the marketplace. He also pointed to another merger — Comcast’s acquisition of NBC Universal in 2011 — as the type of vertical transaction that did get approved even though it presented more potential problems.

But Leon wrote that the Antitrust Division did file an enforcement action to try to block the Comcast-NBC U deal, but it was resolved through a settlement. Moreover, in that case, the FCC had oversight as well, he wrote. The settlement included a set of behavioral conditions, or requirements Comcast had to follow in its business practices. Current antitrust chief Makan Delrahim has expressed his general dislike of settlements that include behavioral conditions, and instead favors the sale of assets as a way to make a merger palatable.

Leon also challenged the notion that this was the “first and only time” that the Antitrust Division has found an antitrust problem with a vertical merger “or insisted on a structural remedy as a condition to settlement.”

“So while it may be, indeed, be a rare breed of horse, it is not exactly a unicorn!” Leon wrote.

The division told AT&T and Time Warner executives that the merger would get their approval if they sold off the Turner networks division, which includes CNN, or DirecTV. The companies declined to do so.

Kerri Kupec, spokeswoman for the Antitrust Division, said in a statement, “We are pleased with and respect today’s decision, which will permit the parties and court to focus on the case at hand. This case has always been about protecting consumers from competitive harms, and we look forward to presenting our case at trial on March 19.”

 

 

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