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AT&T Inc. suffered a blow Feb. 20 when a federal court refused to allow it access to documents that might support its theory that President Donald Trump’s dislike of CNN was the impetus for the Justice Department’s suit to block its merger with Time-Warner Inc..
AT&T can still raise its “selective prosecution” defense at trial before Judge Richard Leon in the U.S. District Court for the District of Columbia. But Leon’s order barring discovery into whether AT&T is being treated unfairly because of Trump’s animus suggests that the court won’t engage that argument in depth. Without the documents, AT&T may not be able to back up claims that politics drove the DOJ’s decision to sue.
Leon said AT&T hasn’t met the high bar for seeking discovery on its claim that it is being treated more harshly by prosecutors than other parties in the same circumstances. His reasoning, and his refusal of discovery into the defense, mean that AT&T likely can’t successfully make that point at trial. AT&T has argued that it should be given the same treatment as Comcast Corp. when it merged with NBCUniversal.
“I think this makes it very clear that the judge is laser focused on the facts of the case and the law and nothing else,” Gene Kimmelman, president and CEO of consumer watchdog Public Knowledge, told Bloomberg Law.
“It effectively indicates that the approach that AT&T has taken is a bit of a distraction to that, and he sweeps it aside,” Kimmelman added of Leon.
The DOJ turned over a list of communications between the DOJ antitrust division and the White House about its views on the AT&T-Time Warner merger, but it balked at handing over a long list of communications between officials outside the antitrust division and the White House. Leon said that the agency doesn’t have to.
Leon didn’t strike AT&T’s defense outright, as the DOJ had requested, which means AT&T can still raise the issue of whether the DOJ’s prosecution was based on political motivations. But he denied AT&T the most direct way to get information to prove that allegation.
The judge said AT&T can’t even clear the first hurdle in making such a defense — that another similarly situated deal got better treatment — since all mergers are technically different. Leon didn’t even consider whether AT&T can clear the second hurdle — offering plausible evidence that the alleged disparate treatment was intentionally discriminatory.
Merger reviews, by definition fact-intensive and based on distinct inquiries, don’t lend themselves to comparisons, Leon said. AT&T argued that if the DOJ permitted the Comcast NBCUniversal merger in 2012 which “presented far more challenges under the antitrust laws,” it has to allow this merger under similar terms. Both mergers are “vertical” — i.e., they don’t involve direct competitors.
Leon said AT&T’s argument that it should be treated like Comcast and NBCUniversal is “unavailing.”
“Defendants will have ample opportunity to argue ‘how weak this case is’ during the upcoming trial,” he said.
“The ruling shows an openness to considering the facts of the case and not a predilection against vertical merger challenges,” Kimmelman said.
Judge Leon “left open the defense, but he’s signaling very strongly that he’s going to decide the case” on the merits under the Clayton Act, he said.
Paul Gallant, an analyst with Cowen Washington Research Group, said in a Feb. 20 research note that Leon’s decision avoids the drama of “injecting President Trump” into an already high-profile trial.
“We wouldn’t view the ruling as a indication that Judge Leon is leaning against AT&T on the merits of the overall case. We doubt he actually has any preconceived views,” the note said.
In a footnote, Leon addressed AT&T’s inclusion of DOJ antitrust chief Makan Delrahim on its witness list. Noting that AT&T said it included Delrahim “out of an abundance of caution,” Leon said he “is now proceeding on the belief that AAG Delrahim will be stricken from the list.”
The case is U.S. v. AT&T Inc. , D.D.C., :17-cv-02511, 2/20/18
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