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From Antitrust Law Daily, November 15, 2017

House Democrats seek hearing on Justice Department review of AT&T-TWI merger

By Jeffrey May, J.D.

Attorney General Jeff Sessions was pressed by House Democrats at a Department of Justice oversight hearing yesterday on whether President Donald Trump has influenced the Department of Justice Antitrust Division’s review of the pending merger of AT&T, Inc. and Time Warner, Inc. Two leading members of the House Judiciary Committee also requested that a hearing be scheduled on competition in the telecommunications and media industry. The hearing would provide an opportunity to explore "the potential for political considerations to affect the outcome of antitrust reviews and investigations in these industries."

On the campaign trail, Trump spoke of blocking the AT&T’s acquisition of TWI, valued at more than $85 billion. The vertical merger would combine one of the nation’s largest phone and internet providers with a media entertainment giant that owns CNN, HBO, TBS, TNT, and Warner Brothers studios.

Often, vertical mergers do not raise the same antitrust issues as horizontal mergers between competitors. A number of lawmakers, however, have continued to voice concerns about this deal’s competitive impact.

The Justice Department has conducted a lengthy investigation into the AT&T-TWI deal. There have been reports that the Justice Department is seeking to require the divestiture of TWI’s CNN cable news channel business or of AT&T’s DirecTV operations in order for the parties to win approval. AT&T CEO Stephenson has said that the parties have not offered to sell CNN and had no intention of doing so.

Some Democrats continue to question whether Trump is influencing the review and possible remedies in light of CNN’s coverage of his campaign. Trump has often been quoted, calling CNN "fake news." These concerns are not new. Sen. Amy Klobuchar (D., Minn.), the ranking minority member of the Senate Judiciary antitrust subcommittee, wrote to Sessions in July, asking him for information on contacts between the White House and the Justice Department regarding the transaction. But talk of a CNN divestiture seems to have reignited the issue.

At yesterday’s oversight hearing, Rep. David Cicilline (D-R.I.), ranking member of the House Judiciary Committee Regulatory Reform and Antitrust Law Subcommittee, suggested that inquiries to the Justice Department from Democrats, including inquiries about possible White House interference in antitrust enforcement, have been ignored. According to Cicilline, nine letters issued to the Justice Department since February from various members of the House Judiciary committee seeking information on a wide range of subjects that have gone unanswered.

Rep. Henry C. Johnson, Jr. (D., Ga.) also questioned Sessions about the sale of CNN as part of the remedy for an AT&T-TWI merger. Johnson repeated the report that the Justice Department has "suggested strongly" that the deal won’t go forward unless has Time Warner sells off CNN’s parent company—Turner Broadcasting. Sessions was asked whether the White House or any individual in or on behalf of the Trump Administration or the Trump political team or campaign—excluding staff from the Federal Communications Commission or Justice Department—had contacted the attorney general regarding the deal.

Sessions said that he could not accept as accurate the news reports about the suggested divestiture relief. Johnson moved on to other issues.

Hearing request. Separately, Reps. Johnson and Cicilline sent a letter to House Judiciary Chairman Bob Goodlatte (R-Va.), on November 14, asking for the hearing on competition in the telecommunications and media industry. The letter points to Trump’s criticism of CNN and says that a senior White House official had referred to the cable news network as a "potential point of leverage" in the pending transaction.

The Senate Judiciary Committee held a hearing last September about the AT&T-TWI merger, where AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes defended the deal. At the hearing, there was skepticism about the pending transaction from Democrats.

Senator Al Franken (D-Minn), ranking member of the Senate Judiciary Committee's privacy, technology, and the law subcommittee, was an outspoken critic, expressing concern over a combined AT&T-Time Warner’s ability to control content distribution. Earlier this month, Franken said that he continued to oppose the AT&T-TWI deal on the ground that it "would create a massive corporation that would wield entirely way too much power, likely resulting in even higher prices, even fewer choices, and potentially worse service for consumers." However, he noted his concern "with the notion that the Justice Department may be pressuring the companies to consider spinning off CNN’s parent company Turner Broadcasting as a path forward toward approval of the acquisition, given the President’s repeated public complaints about CNN’s coverage of him."

Companies: AT&T, Inc.; Time Warner, Inc.

MainStory: TopStory AcquisitionsMergers Antitrust AntitrustDivisionNews FedTracker TrumpAdministrationNews

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