DOJ Tries to Blame CNN For Losing AT&T Merger Case
"The DOJ says it was outgunned and outspent during the recent trial over AT&T's $86 billion acquisition of Time Warner. That blockbuster deal was recently approved after a lengthy lawsuit thanks in large part to US District Court Judge Richard Leon, who based his ruling on a comically-narrow reading of the telecom and media markets. For example, at no point in his 172-page ruling did Leon even address the potential combined anti-competitive problems caused by the combination of merger mania, regulatory capture and the death of net neutrality.
In a blunt statement, DOJ antitrust boss Makan Delrahim indicated he felt that the DOJ was outspent and outgunned by AT&T and Time Warner, with a little help from Time Warner-owned CNN.
"We have some of the best and most dedicated public servants who tried this case, but we don’t have the same resources available to us," Delrahim stated. “We don’t have a 24-hour dedicated news channel to go out and spin your case to the American public and judges and others as some merging parties might."
The implication is that AT&T and CNN manipulated the public and judges into buying into the merger, which tends to ignore the constraints of modern antitrust law and the DOJ's own role in this antitrust enforcement face plant, a failure that is likely to herald an unprecedented wave of new merger mania.
For one thing, a steady erosion of U.S. antitrust have resulted in laws that don't do a very good job protecting the public from the perils of vertical integration. Laws have been so steadily eroded by decades of lobbying influence and legal precedent, that most experts doubt that the government even has the authority to breakup a company like AT&T as they did in 1984. As a result, DOJ lawyers were tightly constrained into very narrow corridors of economic theory as they tried to illustrate the perils and pitfalls of the deal.
Delrahim's comment also ignores the DOJ's own failures in court. Like the fact that at no point in the multi-week trial did the government even mention the concept of net neutrality, despite the obvious impact the death of those rules will likely have on AT&T's ability to use its greater size and leverage (and ownership of HBO) anti-competitively. That's likely, in part, because the government didn't want to highlight how--with its other hand--it was helping ISPs dismantle those popular rules.
Even then, the DOJ focused exclusively on how AT&T will likely raise rates on must-have programming like HBO, making life much harder for companies to license content they need to compete with AT&T. At no point did the DOJ address the potential problems created by letting one company dominate not only media, but the broadband and wireless connections used to deliver that content. There's a universe of ways ISPs can use that power in synergistically-anti-competitive ways that were never even broached at trial.
While the Trump DOJ claimed it was suing to block the AT&T to "protect consumers," the administration's behavior on things like privacy and net neutrality made that argument suspect. Trump's longstanding feud with CNN is seen as a more likely motivator, as Delrahim's comments seem to confirm. Trump-ally Rupert Murdoch had also been urging the President to block the deal for his own competitive reasons for much of the last year (AT&T rejected Murdoch's efforts to buy CNN twice, as well).
Regardless of who's at fault (most experts blame our flimsy antitrust laws, DOJ missteps and a narrow reading of the markets by Leon for the failure), AT&T's now much more powerful. And after having successfully convinced the FCC to neuter itself and net neutrality, it's up to the states and individual consumers to try and hold the Dallas-based giant accountable for the forseeable future.
http://www.dslreports.com/shownews/DOJ-Tries-to-Blame-CNN-For-Losing-ATT-Merger-Case-142093
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