Makan Delrahim, head of the U.S. Department of Justice’s antitrust division, said the DOJ’s legal defeat in its long quest to block AT&T’s acquisition of Time Warner was disappointing but did bear some fruit on appeal.
“You learn more from losing than from winning,” Delrahim said in a speech at a Washington conference put on by America’s Communications Association, formerly known as the American Cable Association. “There are many lessons to be learned from the U.S. v. AT&T.” Delrahim’s remarks were taken from an audio recording of the event made available by conference organizers.
The ACA conference was a welcoming place for Delrahim to offer some of his most extensive public reflections on the case since the appellate ruling. The association wrote an amicus brief supporting the DOJ and one of its members appeared as a government witness at trial. Not surprisingly, then, one word was never uttered during Delrahim’s 20-minute remarks or the brief Q&A period that followed: Trump. While it has never been firmly established, many of those involved have maintained that President Donald Trump’s animus toward CNN prompted him to order the DOJ to bring the lawsuit, the first attempt to block a vertical merger in more than 40 years.
The battle over the $81 billion deal became a high-profile event blending the worlds of Washington and media last year. The DOJ persisted with appealing even after a resoundingly pro-AT&T ruling was issued by U.S. District Court Judge Richard J. Leon last June, which included passages in which Leon explicitly implored the government not to appeal. When the D.C. Circuit Court of Appeals upheld Leon’s ruling last month, the DOJ opted not to keep fighting. That lifting of the legal cloud precipitated the dramatic restructuring of WarnerMedia by the newly liberated AT&T.
One of the biggest takeaways from the case, Delrahim said, is that the effort to secure structural remedies as opposed to behavioral ones is the path the DOJ will continue to pursue. Comcast’s acquisition of NBCUniversal in 2010 is an example of behavioral remedy, with regulators and Comcast signing a consent decree that restricted activity by the merging companies, but only for a period of years. While some stakeholders advocated for such an approach with AT&T — compared with an aggressive, protracted lawsuit — Delrahim said it wouldn’t have been worth it to compromise.
An arbitration offer that AT&T extended on the eve of the trial was viewed by some trial observers as a way to protect the company and its Turner unit from accusations of self-dealing in its negotiations with other distributors. But “the AT&T offer will expire in less than seven years,” Delrahim said. “The new market structure created by the transaction will remain indefinitely. If there’s harm that the arbitration offer is necessary to solve, then there’s likely to be harm in the future that will remain after the arbitration offer expires.” In the case of Comcast-NBCU, he added, certain aspects of the combined company’s conduct are not in the spirit of the consent decree.
The outcome of the appeal was “disappointing,” Delrahim said, but not a shock. “Given the standard of review that we were facing, it wasn’t a surprise,” he said.
On the bright side, he said the D.C. Circuit “corrected many of the District Court’s misstatements and articulated a standard that is valuable,” including the notion that “certain vertical mergers can be harmful.”