AT&T-Time Warner Deal Faces Judge That Heard Comcast-NBCU Case

By Eleanor Tyler

The U.S. Justice Department’s lawsuit to block AT&T Inc.'s $85 billion purchase of Time Warner Inc. will come before the same judge who presided over the closest recent precedent: Comcast Corp.'s 2011 deal with NBC Universal Inc.

In the Comcast case, Judge Richard J. Leon, a senior judge on the U.S. District Court for the District of Columbia, became very familiar with the government’s theory of harm in media distribution markets. He also proved skeptical of behavioral remedies to protect competition ( U.S. v. AT&T Inc. , D.D.C., 17-cv-02511, 11/21/17 ).

Leon’s prior experience with the Comcast deal is a positive development for the government, Rutger’s Law School Professor Michael A. Carrier told Bloomberg Law. “He’ll know the story of competitive harm and how behavioral remedies didn’t work in that case,” Carrier said.Leon, a former Baker Hostetler partner nominated by President George W. Bush in 2001, was randomly assigned the AT&T-Time Warner case Nov. 21 after another judge bowed out due to his wife’s potential conflicts of interest.

Different Posture

In the AT&T case, the Justice Department is suing to block the merger rather than asking a court to approve a remedy that would permit parts of the deal to go forward. By contrast, the DOJ reached an agreed remedy with Comcast to allow its joint venture with NBCU while preserving competition.

In reviewing the DOJ-Comcast agreement, Leon was skeptical that the deal would protect the public interest. Specifically, while reviewing the consent order that would allow the joint venture to go forward, Leon said in 2011 that he “grew increasingly concerned that [DOJ’s] non-appealable arbitration mechanism for online video distributors (OVDs) did not serve the public interest.” He also said he “was unsure whether the proposed Final Judgment adequately empowered [DOJ] to enforce the terms of the agreement.”

Despite his misgivings, Leon approved the agreement but required the parties to create and maintain a report detailing whether OVDs used the arbitration mechanism and what results they achieved in the process. The parties were required to return annually for two years to explain the report as well as any other non-arbitration issues that might arise under the consent order.

In AT&T’s case, Leon will preside over a hostile bench trial between the government seeking to block the deal entirely and the parties seeking to complete it with no restrictions on their future conduct and no divestitures.

The DOJ says only a structural remedy including divestitures from the parties can protect competition. Instead of entering an agreed final judgment with conduct rules that the court might need to police and that the agency would have to enforce, DOJ is seeking an order from Leon putting the whole merger on hold while he considers whether to permanently forbid the merger as harmful to competition.

Experienced Hand

According to Bloomberg Law’s Litigation Analytics, Leon has extensive antitrust experience. He has presided over 14 different antitrust lawsuits in the past decade, including a couple that have proceeded through dispositive motions and complex discovery issues.

Leon is currently presiding over a number of cases filed in 2011 that allege credit card issuers conspired to set ATM access fees.

He also presided over multidistrict litigation that accused Biovail Corp., Elan Corp., and Teva Pharmaceutical Industries of conspiring to fix prices of generic nifedipine, a prescription hypertension drug. The parties settled in 2011, and Leon entered final judgment in the case after almost a decade of litigation.

Leon, a graduate of Suffolk Law School and Harvard Law School, has experience in all three branches of government.

He served as as a trial attorney in the Justice Department’s Tax Division and as a deputy assistant attorney general in the environment division. He also was the deputy chief minority counsel for the House Iran-Contra committee investigation and a special counsel to the House Banking Committee’s Whitewater investigation.

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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