The Department of Justice appeared to cede ground in its battle against the pending merger between AT&T and Time Warner in its closing argument on Monday. The DOJ argued “alternative” solutions should be considered if the deal isn’t blocked.
Justice Department attorney Craig Conrath asked U.S. District Judge Richard Leon — the lone decision maker in the case — to force a “partial divestiture,” where AT&T only buys a portion of Time Warner, according to the Wall Street Journal. Judge Richard Leon said he planned to rule by June 12, ahead of the June 21 merger deadline, The Hill reported.
AT&T CEO Randall Stephenson has scoffed at the notion of a curtailed deal in the past, saying he has “no intention” of dropping Time Warner networks, like CNN, to receive the regulatory green light.
Conrath made the pitch after doubling down on the U.S. government’s central argument — that the union would stifle competition and lead to much higher prices for consumers. He added that the DOJ met its burden in the case, and wasn’t obligated to prove the deal would spike prices for consumers. Antitrust laws “deal in probabilities, not certainties,” Conrath argued, according to Bloomberg. “It does that so consumers don’t bear the risks.”
Georgetown economics and law professor Steven Salop told TheWrap that the government doesn’t need to prove beyond a reasonable doubt the merger would lead to stifled competition. That’s not the standard in antitrust cases.
“The DOJ was basically quoting from the statute, section 7 of the Clayton act, and the standard case law on horizontal mergers,” Salop said. “Merger analysis is necessarily predictive, since the merger has not yet occurred.”
While the DOJ only has to show it’s likely that AT&T’s merger with Time Warner would lead to higher costs for consumers, the lead lawyer for AT&T and Time Warner said that was “A burden that the government did not come close to meeting,” Bloomberg reported.
Both AT&T and Time Warner have strongly pushed back against the government’s position that the deal would hurt competition or customers. Time Warner CEO Jeff Bewkes testified earlier this month it was “ridiculous” to believe it would allow the company to raise licensing fees and blackout pay-TV operators in the midst of negotiations, as the DOJ had argued.
Monday’s closing arguments are the latest turn in the long and winding road that has become the AT&T-Time Warner deal. The telecom giant offered to buy Time Warner for $85.4 billion in late 2016, but the deal has been in limbo ever since, with the U.S. government suing to block the deal last fall. AT&T and Time Warner have argued similar “vertical mergers” have been met with little resistance by the Justice Department in the last 40 years.