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From Antitrust Law Daily, July 19, 2018

Justice Department seeks expedited appeal in its challenge to AT&T-Time Warner combination

By Edward L. Puzzo, J.D.

The Department of Justice Antitrust Division has moved for expedited consideration of its appeal of a federal district court’s rejection of its challenge to the combination of AT&T and Time Warner. The motion proposes an expedited briefing schedule concluding on October 18, 2018. The government argues that expedited consideration of its appeal of the district court's decision is necessary because the decision is subject to substantial challenges on appeal, and delay will make it increasingly difficult to unwind the merger. The government further argued that merger cases face unusual exigencies which have warranted expedited appeals in the past, and that the public has a strong interest in a prompt disposition of these challenges (U.S. v. AT&T Inc., July 18, 2018).

Previously, the Justice Department sought to enjoin the combination of AT&T, a leading provider of communications and digital entertainment services with two traditional multi-channel video distributor (MVPD) products—DirecTV and AT&T U-verse—that purchase and distribute video content, and entertainment giant Time Warner, operator of cable networks—including CNN, TNT and TBS, a movie studio creating and supplying video content a movie studio creating and supplying video content—Warner Bros. Entertainment—and Home Box Office (HBO). The government attempted to establish that the acquisition would likely result in a substantial lessening of competition: (1) by enabling Time Warner’s Turner Broadcasting cable network to charge AT&T’s rival distributors—and ultimately consumers—higher prices for its content; (2) by creating an increased risk that merged firm would act, either unilaterally or in coordination with a competitor, to thwart the rise of low-cost virtual MVPDs that were threatening the pay TV model; and (3) by preventing AT&T’s rival distributors from using the Home Box Office cable network as a promotional tool to attract and retain customers.

On June 12, the federal district court denied the Justice Department's request to enjoin the proposed merger. AT&T completed its acquisition of Time Warner shortly thereafter. The government agreed not to seek a stay pending appeal in light of certain commitments from the merger partners. The Justice Department filed its notice of appeal on July 12 but did not provide any insights into its reasons at that time.

In its latest filing, the government contends that its lawsuit challenging AT&T’s acquisition of Time Warner "concerns the future of the telecommunications and media industries in the United States." The government went on to say that the lower court "rejected fundamental principles of economics, creating uncertainty that will have an outsized effect on vertical merger analysis."

The case is No. 18-5214.

Attorneys: Mary Helen Wimberly, U.S. Department of Justice, for United States. Peter Douglas Keisler (Sidley Austin LLP) for AT&T, Inc. and DirecTV Group Holdings LLC. Christine Anne Varney (Cravath, Swaine & Moore LLP) for Time Warner Inc.

Companies: AT&T Inc.; DirecTV Group Holdings, LLC; Time Warner Inc.

MainStory: TopStory Antitrust AcquisitionsMergers AntitrustDivisionNews

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