By Brent Kendall 

WASHINGTON -- AT&T Inc. on Thursday defended a court ruling that allowed it to buy Time Warner, arguing that both the law and current industry realities showed the acquisition wouldn't harm competition.

The telecom giant made its case for the deal in a 59-page brief filed with a Washington, D.C., federal appeals court, which is considering the Justice Department's ongoing challenge to the merger.

The DOJ sued last year to block the deal, but U.S. District Judge Richard Leon, after a six-week trial, broadly rejected the government's antitrust case in a June ruling. The company closed the transaction a short time later.

"In the crucible of litigation, DOJ's claims were exposed as both narrow and fragile," AT&T said in its new brief.

The Justice Department is arguing on appeal that Judge Leon ignored fundamental economic principles when he ruled for AT&T.

The company responded Thursday that Judge Leon "well understood the economics" of DOJ's case, but that the evidence at trial didn't support the department's claims that the deal would lead to higher prices.

The Justice Department's central theory was that consumers would be worse off if AT&T, which owns a top pay-TV distributor in DirecTV, also owned a top producer of programming like Time Warner. The department argued that AT&T could force its cable and satellite rivals to pay higher fees to carry popular Time Warner networks like TBS, TNT and CNN.

AT&T said the evidence showed that the vertical integration of video distribution and programming in one company didn't produce higher prices. It also said the Justice Department's own witnesses at trial contradicted the government's position.

AT&T did raise the price of its DirecTV Now streaming service after it won at trial -- a fact noted by the DOJ on appeal -- but AT&T said the price hike was "legally and factually irrelevant" and reflected "expanded programming options."

The Justice Department's challenge to the AT&T-Time Warner deal was complicated by comments President Trump made as a candidate in 2016 in which he pledged his administration would block the merger. The companies have questioned whether Mr. Trump's dislike of CNN factored into the DOJ's decision to sue.

The department has vigorously denied that the White House, or political considerations, influenced its decision to sue. But AT&T quoted Mr. Trump's comments on the first page of the appellate brief it filed Thursday.

During the trial, Judge Leon crimped the companies' ability to argue that they had been treated unfairly, so the political landscape wasn't part of the trial. The judge said the companies "have not made a credible showing that they have been especially singled out" by the Justice Department.

A date for oral arguments in the appeal hasn't yet been set. A Justice Department win could open the door to an unwinding of the merger.

Write to Brent Kendall at brent.kendall@wsj.com

 

(END) Dow Jones Newswires

September 20, 2018 18:06 ET (22:06 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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