AT&T-Time Warner to Court: DOJ Case Fell Apart

Tells court it was built on bogus model, irrelevant slide shows
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The government "came nowhere close" to proving the proposed AT&T-Time Warner merger violates antitrust laws. 

That is according to the post-trial brief filed by AT&T and Time Warner Thursday (May 3) with the D.C. Federal District Court. The Justice Department's suit to block the deal wrapped up April 30, with the judge expected to take several weeks to render a decision.

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The companies said that the government's case was built on "non-probative competitor complaints, irrelevant slide shows," and a theoretical model of harm that collapsed under the weight of "real-world" evidence, then disintegrated upon first contact with real-world events, testimony, and data."

Related: Genachowski on AT&T Suit: DOj Has Hard Case to Make

The Justice Department had asserted that without spinoffs of Turner programming networks, the merger would mean substantially less competition and thus higher prices for consumers.

The companies argue that to make their case, the government had to prove that the merger "will likely (not potentially or possibly) lessen competition substantially, in a video marketplace that is experiencing revolutionary, unstoppable transformation and growth in competition at all levels."

Rather than "concrete evidence" based on "real world experience," Justice based its case on "conjured crystal-ball prognostications," they said.

The government's own witness had conceded during the trial that its cost model was off, a point the companies drilled down on in their comments.

"The government itself conceded that the merger would cause prices to go down for millions of AT&T customers nationwide," they told the court. "The government’s own 'bargaining model' likewise showed a price decrease for all consumers once the correct data were employed."

AT&T and Time Warner argued throughout the trial, and before it, that the merger would boost competition, because that competition was coming from increasingly powerful edge providers like Facebook, Amazon, Netflix and Google.

Related: PTC Says A La Carte Is Path to Deal Approval

Justice had argued that "AT&T would use Time Warner’s Turner content as a 'weapon' against rival distributors by threatening to withhold it during bargaining, thereby forcing them to pay higher prices," and was unconvinced by the company's offer of behavioral conditions including an enforceable pledge to provide nondiscriminatory access and submit to arbitration for any disputes.

Antitrust chief Makan Delrahim had signaled before the trial and shortly before Justice filed suit that he thought structural conditions--like the HBO and CNN spin-offs Justice sought, though he did not cite the merger--could be more effective than behavioral remedies--say mandatory nondiscriminatory access to Turner programming--which he likened to an attempt to make an illegal transaction legal through ongoing conditions that were hard to enforce.

But the companies told the court that after the government conceded that Turner would not, in fact, withhold content post-merger, it was left to fall back on "predictable" complaints from rivals, complaints AT&T-Time Warner said stemmed from those complainants' desire to avoid competition the merger would create, which is why antitrust analysis gives such complaints short shrift, they said.

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