This morning, a three-judge panel for the US Court of Appeals for the District of Columbia Circuit upheld US District Court Judge Richard Leon’s decision allowing the $86 billion merger of AT&T Inc. and Time Warner Inc. to proceed without conditions, rejecting the Justice Department’s claims that the merger violated Section 7 of the Clayton Act because it would “substantially lessen competition” in the subscription video market.   The following statement should be attributed to Gigi Sohn:

The DC Circuit’s decision demonstrates that US antitrust laws and Justice Department merger guidelines are sorely in need of reform.  It has become nearly impossible for the government to meet its burden of showing that a merger violates the antitrust laws, especially when it comes to vertical mergers. Congress should pass  S. 307, the Consolidation Prevention and Competition Act of 2019, which, among other things, places the burden on merging parties in large mergers to demonstrate that their transaction is not anticompetitive  and makes illegal mergers that are materially likely (rather than substantially likely) to lessen competition.  It also validates the need for the Justice Department to update its vertical merger guidelines, which as the court noted, are 35 years old and grossly outdated.

The Justice Department tied at least one hand behind its back when it refused to argue that AT&T could use its power as both a wireline and a mobile broadband Internet access provider to favor Time Warner programming over other unaffiliated programming. It could have made this argument without validating the 2015 net neutrality rules, but it refused to do so, perhaps in fealty to the FCC’s 2017 decision to repeal the rules. Indeed, AT&T is currently favoring both Time Warner and DirecTV content over its broadband services through its DirecTV Now and WatchTV services. Consumers are the losers because the Justice Department placed ideology over a powerful argument against this merger. 

Gigi Sohn is a Distinguished Fellow at the Georgetown Law Institute for Technology Law & Policy and the Benton Foundation Senior Fellow and Public Advocate. She was Counselor to former FCC Chairman Tom Wheeler from November 2013-December 2016. Gigi can be reached for comment at the above email address or at 202-253-0876.  More on Gigi can be found at gigisohn.com.