Ex-DOJ Officials Raise Trump, AT&T Merger Interference Concerns

Legal Issues

from the do-the-ends-justify-the-means? dept

Last fall, the Department of Justice announced it would be suing to block AT&T’s $86 billion acquisition of Time Warner. According to the DOJ, it sued to block the lawsuit to protect consumers, arguing that the deal would likely make it harder for streaming competitors to license the content they need to compete with AT&T (especially HBO programming). Consumer advocates have long argued that AT&T (with its decade of well-documented and often comedic anti-consumer behavior in tow) would simply use its greater leverage and power to hamstring competition and jack up rates for consumers (especially with net neutrality dying).

While some have argued that the DOJ is simply following antitrust protocol, others (including AT&T lawyers) think the lawsuit is driven by other motivations.

That’s not a hard case to make given the Trump administration’s anti-consumer, anti-innovation, and anti-competition tendencies on other fronts (like net neutrality). Trump’s pick to head the DOJ’s antitrust division, Makan Delrahim, was also on record, before joining the DOJ, stating he saw no real problems with the deal. Meanwhile Trump’s disdain for Time Warner-owned CNN is also well established, and reports have indicated that Trump pal Rupert Murdoch spent much of last year trying to scuttle the deal for competitive reasons (Muroch has also approached AT&T twice about buying CNN).

Adding fuel to this fire was a bipartisan group of ex-DOJ officials (from US Attorney Preet Bharara and Nixon White House counsel John Dean) that, last week, filed an amicus brief with the court urging an inquiry into whether any potential laws were broken. The brief doesn’t even mention Murdoch, and instead focuses on the obvious, inherent problems in scuttling a merger just because the President doesn’t like one of the media outlets involved:

“While any improper use of government authority to punish critics or reward supporters would pose a grave threat to our constitutional system, that threat is particularly acute in a situation in which the government uses or appears to use its regulatory authority to punish media entities or others who are critical of the government. Such behavior could chill criticism, endangering the kind of free and open speech and debate that our Founders adopted the First Amendment to protect precisely because it is necessary for self-government.”

While that’s true, Bharara’s specific objections here are somewhat rich for him personally, given that during his tenure he seized domain names and refused to return them — only giving them back once it was abudantly clear he wasn’t going to win in court. Bahara’s office also issued a gag order over a subpoena to Reason just because a few folks said some mean things about a Judge.

Regardless, hoping to use these concerns to defeat the DOJ lawsuit, AT&T lawyers have been busy trying to get a hold of evidence proving that the Trump administration pressured the DOJ to try and derail the lawsuit. But late last month Judge Richard J. Leon rejected AT&T’s request for detailed email and phone logs between the White House and the Justice Department related to the deal, forcing AT&T to scuttle that angle of their legal defense. Needless to say, whichever way this ruling goes could have a profound impact on the media, broadband, and advertising markets for years:

“If the judge sides with AT&T and Time Warner, he would usher in the creation of a new kind of corporate behemoth ? one with nationwide reach via wireless and satellite television service that would also have control over a movie studio and channels like HBO, CNN and TNT, which has valuable basketball sports rights. The company would have a leading position to negotiate licensing deals with rival telecom and media firms. It would also be in a stronger position against fast-growing streaming video services like Netflix and Amazon Prime Video.”

Questions over the DOJ’s actual motivation here have created an interesting conversation over whether the ends justify the means, even if the motivation is cronyism and not consumer welfare. Whether the deal should be blocked has become increasingly relevant in the wake of the Trump FCC’s attack on net neutrality, a move that could open the door to all manner of “creative” efforts by a bigger, more powerful AT&T to hamstring competition in the media space, should the deal be allowed to proceed.

All told, we’ve ironically got the Trump DOJ breathlessly claiming it’s trying to protect consumers from a bigger, badder AT&T, while the Trump FCC empowers AT&T to engage in more anti-competitive shenanigans than ever before — with no sign that anybody in government realizing they’re operating at cross purposes if “consumers” really are the driving motivator. The Justice Department?s antitrust lawsuit against AT&T and Time Warner, filed back in November, is scheduled to go to trial on March 19.

Filed Under: doj, donald trump, interference, john dean, merger, preet bharara
Companies: at&t, time warner