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AT&T-Time Warner: Trial ‘Confirmed’ They Were Singled Out for Antitrust Case

Attorneys for AT&T and Time Warner said in a court filing on Thursday that the evidence presented by the government in the antitrust trial showed that they were the victims of differential treatment from other vertical transactions.

The comment was made in a footnote to the AT&T-Time Warner trial brief, in which the companies dismissed the government’s case as falling far short of proving that the transaction posed competitive harm. The companies did not pursue a “selective enforcement” defense in the six-week trial, after U.S. District Judge Richard Leon refused their pre-trial request to obtain records of communication between the White House and the Justice Department.

“Defendants have not abandoned their selective enforcement defense,” the companies said in a footnote. “Trial evidence confirmed the government’s differential treatment of comparable vertical mergers. But absent discovery, it was impractical for defendants to press the issue further at trial.”

AT&T-Time Warner’s lead attorney Daniel Petrocelli had sought a privilege log of DOJ-Trump administration communications, ostensibly to pursue a potential defense that the effort to block the merger was influenced by President Trump’s animus toward CNN, a division of Time Warner-owned Turner. But Leon wrote in February 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.

The Justice Department claims that the combined companies will use increased leverage to extract greater carriage fees for CNN, TBS, TNT and other Turner networks from AT&T’s rivals. Ultimately, those increased costs would be passed on to consumers.

In the trial brief, the companies said that “this is not a close case,” and that in fact the trial showed that consumers would face lower prices, and the merged company would be better able to compete with internet giants like Facebook and Google. “The only appropriate judgment is one that finds no legal violation, denies the requested injunction, and brings the case to a prompt conclusion.”

AT&T-Time Warner’s legal team also argues that Leon cannot impose remedies, or a set of conditions, on the proposed merger, without concluding that it poses anticompetitive harm.

They keyed in on a moment from Monday’s closing arguments, when Leon asked the Justice Department’s lead counsel, Craig Conrath, whether he first had to find an antitrust violation before imposing a remedy. Conrath agreed that was the case.

That’s potentially significant, as earlier in the trial Leon had queried one witness as to whether he would be amenable to a merger that included a modified arbitration provision.

Shortly after the case was filed in November, Time Warner’s Turner networks offered to go into “baseball” style arbitration to settle carriage disputes with AT&T’s rivals. The offer was a way to alleviate concerns that the combined company would gain too much leverage among cable, satellite and other distributors. If the clause were involved, Turner could not pull its networks during the carriage dispute, eliminating the threat of a blackout.

AT&T-Time Warner’s legal team argues that the arbitration provision should not be treated as a “remedy,” but a “commitment.” They say that Leon could “issue findings and conclusions about the commitment that will confirm the rights and obligations it entails.”

They said that the Justice Department failed to take the arbitration clause into account in assessing the merger, and their “conscious refusal to do so was a fundamental failure of proof on liability issues and should be treated as such.”

Leon was the same judge who signed off on Comcast-NBCUniversal’s merger in 2011, which included a host of conditions, but AT&T-Time Warner’s legal team said that this case is different.

“The Tunney Act, which applies only to DOJ antitrust settlements, required this court to confirm that DOJ had not granted Comcast an inappropriately lenient deal and that the settlement was ‘in the public interest,'” the companies said in their trial brief. “This case involves no such statutory mandate. This is a fully litigated case, and the government failed to prove” a violation of antitrust law.

(Pictured: Daniel Petrocelli)

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