DoJ Says It’s Appealing AT&T-Time Warner Deal Because the Judge Ignored ‘Fundamental Economics’ and ‘Common Sense’
The U.S. Justice Department explained Monday why it’s appealing a court’s approval of AT&T’s $85 billion purchase of Time Warner—and it wasn’t pulling its punches. In short, the judge ignored “fundamental principles of economics and common sense,” said the brief.
Makan Delrahim, the DOJ’s assistant attorney general for antitrust, said that Judge Richard Leon of the U.S. District Court of for the District of Columbia “discarded the economics of bargaining” in approving the deal, while disregarding “the foundational principle that a corporation with multiple divisions operates them to maximize the corporation’s overall profits.”
In a closely watched antitrust case that stretched on for months, the DoJ argued that AT&T buying Time Warner would hurt American consumers with higher monthly bills and less innovation. The media assets of Time Warner would give AT&T unfair pricing leverage over rivals such as Comcast and Charter and possibly block them from networks such as CNN and TBS.
Leon sided with AT&T and issued a stinging rebuke to the DoJ in the process. “If there were ever an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one,” Judge Leon wrote in his 172-page ruling in June. “I conclude that the Government has failed to meet its burden to establish that the proposed transaction is likely to lessen competition substantially.”
Leon urged the government at the time not to appeal his ruling, saying he wouldn’t delay the acquisition any longer if that happened. AT&T formally closed the transaction on June 14. On July 12, the DoJ said it would file an appeal, and now the government is formally taking issue with Leon’s assessment of its case.
“The district court’s determination that Time Warner would not have increased bargaining leverage post-merger erroneously disregarded the economics that governs negotiations in this industry,” the DoJ’s brief said.
AT&T has until Sept. 20 to file its own brief in the D.C. Circuit. The company was already speaking out Monday on the DoJ’s line of argument.
“Appeals aren’t ‘do-overs,’” AT&T General Counsel David McAtee said in a written statement. “After a long trial, Judge Leon weighed the evidence and rendered a comprehensive 172-page decision that systematically exposed each of the many holes in the government’s case. There is nothing in DOJ’s brief today that should disturb that decision.”