Judge Weighs AT&T’s Request for Any Records of Potential Trump Influence in Antitrust Case

Makan Delrahim

WASHINGTON — The question of whether President Trump’s disdain for CNN influenced the Justice Department’s decision to sue to block AT&T’s proposed merger with Time Warner was at the heart of the latest hearing in the case.

U.S. District Judge Richard Leon said that he would decide by Tuesday whether AT&T and Time Warner’s legal team, led by Daniel Petrocelli, could obtain more information about the written communications and oral conversations between the Justice Department’s Antitrust Division, the Attorney General and the White House.

The Justice Department is objecting to the request, as its lead attorney Craig Conrath argues that it was a “fishing expedition” and that AT&T had yet to meet the legal threshold to pursue such as strategy.

Petrocelli, however, said that there was ample justification for seeking such information given Trump’s own statements and that the DOJ had failed to fully respond to previous requests to produce it.

The trial is scheduled to start on March 19.

The hearing was just the latest status conference, but it was expected to be contentious after reports that AT&T-Time Warner was seeking to place the Justice Department’s antitrust chief, Makan Delrahim, on its witness list to compel him to testify.

That would be highly unusual, and it was a signal that AT&T-Time Warner’s legal team was at the very least leaving open the possibility of pursuing an argument that the White House improperly influenced the Antitrust Division’s decision to sue to block the $85 billion deal.

In the face of the DOJ’s plans to object to having Delrahim as a witness, Leon indicated at Friday’s hearing that he would not approve placing him among the names of possible witnesses but said that AT&T could pursue that possibility at a later time if it could show cause.

The status conference on Friday was by far the most contentious of all public meetings so far between the legal teams, as both sides gave a glimpse of what they planned to argue at the trial.

Petrocelli said that AT&T had been working “in quite extreme detail” on a consent decree with the Justice Department last summer, in which the merger would be approved but with significant conditions. Those would include conditions that  the combined company would be forced to arbitrate disputes over the carriage of the Time Warner cable channels, as well as a prohibition on withholding content from rivals.

But that changed once Delrahim took over the Antitrust Division in September, Petrocelli said, having most recently worked as a counsel at the White House. AT&T was faced with a choice of either divesting the Turner networks or DirecTV, another unit of Time Warner.

“Rather than complete the consent decree, instead we were asked to divest large chunks of the merger,” Petrocelli said.

He said that what they are seeking are “privilege logs,” or a listing of conversations and communication about the transaction. He said that the Justice Department had produced logs that had to do with communication between the White House and the Antitrust Division, but it was related to Delrahim’s confirmation process.

Petrocelli also said that Time Warner CEO Jeff Bewkes went through a deposition in the case on Thursday, and went into detail about why he believed that Trump was a factor in the Justice Department decision to try to block the deal. Justice Department attorneys queried him about that issue during the deposition, Petrocelli said.

He said that what was at stake in their pursuit of any documents was “the public’s trust and confidence in the integrity of enforcement.”

During the presidential campaign, Trump said that the AT&T-Time Warner deal was a transaction “we will not approve in my administration because it’s too much concentration of power in the hands of too few.” He has repeatedly bashed CNN and its coverage of his campaign and his presidency.

On Thursday, AT&T CEO Randall Stephenson told a crowd at Boston College that the “elephant in the room” was Trump’s opposition to the deal and unhappiness with CNN, which is a unit of Time Warner.

“The president, who is not the biggest fan of CNN, expressed his objections to the deal, very publicly,” Stephenson said, according to the Boston Herald.

Stephenson also noted that in October, 2016, while he was on the faculty at Pepperdine, Delrahim told a Canadian broadcaster that in looking at the proposed merger he didn’t “see this as a major antitrust problem.” Delrahim went on to work in the administration before Trump nominated him to be antitrust chief.

Conrath presented an affidavit to the court from Delrahim in which he said that at “no time” did he receive “orders, instructions or directions” on the merger from Trump, Attorney General Jeff Sessions and other lead officials in White House and Justice Department.

Conrath said that AT&T was not singled out for enforcement. “The president is unhappy with CNN. We don’t dispute that, but AT&T wants to turn that into a get-out-jail-free card for their illegal merger,” he said. Andrew Finch, who was acting chief of the Antitrust Division before Delrahim’s Senate confirmation, made it clear to AT&T and Time Warner’s legal team in August that they were focusing on “structural relief,” or requiring that the combined company sell assets as a condition for approval, he said.

The Justice Department contends that the merger would harm consumers because AT&T-Time Warner would have the incentive to drive up prices for cable channels, including the Turner networks. The costs that other distributors would have to pay to carry those channels would ultimately be passed on to consumers.

“If this merger were to go forward, who knows what would happen next in terms of the consolidation of the industry,” Conrath said.

AT&T, however, says that this is just the type of vertical merger that has passed muster with antitrust officials for decades, and that the Antitrust Division was diverging from precedent in seeking to block their transaction.

House Democrats are seeking records from Sessions on the decision to file the lawsuit and whether it was related to CNN’s coverage.

Delrahim denied that CNN’s coverage of Trump played a role in the decision to sue to block the transaction.