Justice Challenges AT&T's Maneuver -- WSJ
February 17 2018 - 03:02AM
Dow Jones News
By Brent Kendall
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 17, 2018).
WASHINGTON -- The Justice Department asked a federal judge not
to allow AT&T Inc.'s defense of its proposed acquisition of
Time Warner Inc. to include a claim that the Trump administration
improperly challenged the deal for political reasons.
In a 90-minute hearing, lawyers for the department and the
companies clashed over whether there is a basis for the companies'
claim that the government's challenge to the merger was
illegitimate.
The two sides also voiced deep disagreement over whether there
was any relevance to past statements by President Donald Trump
criticizing Time Warner's CNN and his pledging during the
presidential campaign to block the merger if elected.
Mr. Trump doesn't like CNN "and we don't dispute that," Justice
Department lawyer Craig Conrath said, adding that "AT&T wants
to turn that into a get-out-of-jail card for their illegal
merger."
Mr. Conrath said there was no political motivation behind the
Justice Department lawsuit, filed in November, seeking to block the
deal. He called AT&T's efforts to raise the issue "an
unnecessary distraction, a sideshow."
Mr. Conrath also presented to U.S. District Judge Richard Leon
an affidavit from Justice Department antitrust chief Makan Delrahim
in which the top antitrust official said he hadn't received
instructions or directions from Mr. Trump or anyone else outside
the department's antitrust division on whether to challenge the
merger.
Daniel Petrocelli, the lead trial counsel for AT&T and Time
Warner, said the issue was "an uncomfortable subject. This is not
something we relish getting into."
Mr. Petrocelli said the companies have ample reason for
exploring questions about whether they were sued improperly, and he
asked Judge Leon to require the government to provide logs of
certain communications at the Justice Department and the White
House that may shed light on that question.
What is at stake is "the public's trust and confidence in the
integrity of their enforcement decisions," Mr. Petrocelli said.
The affidavit from Mr. Delrahim didn't settle the matter, said
Mr. Petrocelli, who noted that the antitrust chief previously
served as a deputy counsel in the White House. "What about
conversations when Mr. Delrahim was in the White House?" he
asked.
Judge Leon said he would rule by Tuesday on whether AT&T can
seek more materials from the Justice Department on the issue.
The trial is scheduled to begin March 19.
The Wall Street Journal reported Wednesday that AT&T had
placed Mr. Delrahim on its list of possible witnesses for the
trial. It's highly unusual for defendant companies to seek
testimony from the official who sued them. Mr. Petrocelli confirmed
that he placed Mr. Delrahim on the list, "just in case" his
testimony might be needed. He agreed to strike the antitrust chief
from the list for now, so long as he could add him later if there
were good cause for doing so.
Friday's hearing saw the government and the companies reveal an
array of behind-the-scenes discussions that took place before and
after the Justice Department brought its case.
In debating whether there was anything unusual about the
department's decision to challenge the deal, the two sides offered
starkly different views of negotiations that took place in the
run-up to the lawsuit.
Mr. Conrath said the Justice Department presented AT&T with
four different types of settlement offers that would have allowed
government approval of a modified version of the merger. Some of
those offers would have allowed the merged company to keep full or
partial ownership of CNN and the other Turner networks, he
said.
Mr. Conrath also said the department was "clear throughout" its
yearlong investigation that a lawsuit was a possibility, and most
of the investigation took place before Mr. Delrahim won Senate
confirmation for the antitrust post. The department before Mr.
Delrahim's arrival already had told the companies they would need
to make structural changes to their transaction if they wanted to
save it, Mr. Conrath said.
"They totally ignored that," he said.
Mr. Petrocelli, in contrast, said that before Mr. Delrahim
arrived, the two sides were well on their way to negotiating a
settlement that involved AT&T winning approval based on making
commitments to refrain from certain conduct after the merger that
might dampen competition.
Such conditions were similar to those the department allowed
when it gave approval for Comcast Corp. to take control of
NBCUniversal in 2011, he said.
When Mr. Delrahim arrived at the Justice Department after his
stint in the White House, "those discussions stopped," Mr.
Petrocelli said.
He said the department from that point sought "drastic remedies"
that "were not viable proposals."
Write to Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
February 17, 2018 02:47 ET (07:47 GMT)
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