Fair Play: Data Diving in the AT&T, Time Warner Case


FAIR PLAY

Antitrust deciphered.

ATT Blog 2

The judge overseeing the government’s high-profile lawsuit to block AT&T Inc.’s proposed $85.4 billion merger with Time Warner Inc. is giving wide latitude to AT&T attorneys seeking information about their competitors.

Call it an occupational hazard of litigating. If there’s data available for defendants to make their case, their right to a fair trial dictates that they should have access to it, even if it’s sensitive.

At the most recent status hearing Jan. 19, Judge Richard Leon of the U.S. District Court for the District of Columbia ordered the Justice Department to ask nine of AT&T and Time Warner’s competitors to allow the government to release their confidential data to AT&T.

The DOJ has collected data on pricing from Comcast Corp., Charter Communications Inc., Cox Communications Inc., Altice NV, Walt Disney Co., 21st Century Fox Inc., Viacom Inc., Discovery Communications Inc., and Scripps Networks Interactive Inc., during previous merger probes. AT&T wants access to it on the theory that pricing data used in past merger investigations is relevant to the DOJ’s case to stop its own purchase of Time Warner.

(CBS Corp. and Dish Network Corp. without explanation consented to allow the DOJ to release their pricing data to AT&T, obviating the need for more courtroom pressure on AT&T’s part.)

Merger investigations are data-heavy because enforcers are identifying the relevant markets that could be affected by a proposed tie-up. Government economists need a clear picture of the relative strength and weaknesses of the merged entity, and its competitors, to assess how a market would change. But pricing information is sensitive, and corporate executives generally aren’t keen on handing it over to the government without any guarantees. That’s why the DOJ swears to keep that information under lock and key. The government is legally bound not release it to any third party without permission.

Judge Leon’s directive says the DOJ must now ask each firm to consent to the government handing over the data to AT&T attorneys. If the companies refuse, AT&T’s next step will be to issue subpoenas, which will then be argued before the judge. He will likely grant them, probably with caveats that guard against inadvertent disclosure or misuse. That’s what he did in December despite complaints from Fox and Disney that his protective order didn’t do enough to preserve the confidentiality of the data they’d turned over to the DOJ about distribution deals, subscribers, and revenue. Such information, Judge Leon believes, shouldn’t be hidden from the litigators who are arguing a case.

Lawsuits about mergers depend on data. The DOJ will use it to show that a merged AT&T-Time Warner would unfairly dominate a particular market by drawing a picture of the merged entity’s assets as well as those of its competitors. AT&T needs the same tools to counter the argument.

The court, for its part, needs to strike a balance between the AT&T’s ability to defend itself and the interests of the third parties who don’t want their company secrets leaked. Judge Leon has shown a willingness to allow AT&T to see all the information available. But he also is likely to listen to the other companies’ requests for some sort of protective order that maintains the secrecy of their data outside of the trial, as he did with Fox and Disney.

AT&T has argued from Day One that the DOJ is acting inconsistently by blocking its merger with Time Warner when it approved similar deals. With pricing and distribution data in hand, AT&T lawyers can look for parallels between past approved mergers and ask why its bid to buy Time Warner is so awful now.

What’s Happening

Deputy Attorney General Rod Rosenstein will give a “fireside chat” on Monday at the State of the Net annual conference in Washington, D.C.

President Donald Trump will give his State of the Union address on Tuesday night. It’s unlikely his speech will touch on antitrust issues. But the Democratic response, to be delivered by Rep. Joe Kennedy (D-Mass.) might mention corporate consolidation.

AT&T and DOJ attorneys will appear in court on Friday for a status hearing in the AT&T-Time Warner case.

Quote of the Week

“Honored that @POTUS has expressed his intent to nominate me as a judge on the U.S. Court of Federal Claims. I’ll continue to serve proudly @FTC until a time when I may be so fortunate as to be confirmed by the U.S. Senate.”

-- Acting FTC Chairman Maureen Ohlhausen in a tweet

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