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District judge says AT&T failed to show DOJ selectively enforced antitrust laws

The U.S. District Court for the District of Columbia dealt an early blow to AT&T Inc. in a ruling that could undercut its defense strategy ahead of a March trial about the company's pending acquisition of Time Warner Inc.

In a court decision released Feb. 20, U.S. District Judge Richard Leon said the U.S. Department of Justice does not have to provide AT&T or the court with logs showing all written communications between the White House and U.S. Attorney General Jeff Sessions about the deal. The court also declined to compel the Justice Department to provide logs showing written communication between Sessions' office and the DOJ's antitrust division regarding the matter. AT&T had requested these logs as part of its defense arguing the lawsuit against the AT&T/Time Warner deal represents "improper selective enforcement of the antitrust laws."

The DOJ filed a lawsuit in November 2017 to block AT&T's $106.40 billion purchase of Time Warner. In its lawsuit, the department argued that the combination of AT&T and Time Warner's assets would give the resulting entity too much power in the pay TV and online video marketplace, a claim AT&T has disputed. Rather, AT&T has argued that the Justice Department is suing to block the telco's purchase of Time Warner because of Time Warner's ownership of CNN (US). The cable news network, AT&T notes, "has engaged in political speech disfavored by President Trump." The company was seeking the government logs to help prove this defense.

Leon, in denying AT&T's request for the logs, said the company had failed to meet the "rigorous standard" required under the circumstances. He cited legal precedent requiring a company to put forward "some evidence tending to show the existence of the essential elements of the defense, discriminatory effect and discriminatory intent" before a company can demand written logs from the government like those sought by AT&T.

Specifically, Leon said AT&T had "fallen far short" of showing the Justice Department's lawsuit was selective because he said it had failed to show a comparable deal that the Justice Department treated differently. While AT&T argued that regulators have for decades allowed other vertical mergers to proceed, pointing in particular to the Comcast Corp./NBCUniversal Media LLC combination, Leon said the Comcast/NBCUniversal deal was different because the Justice Department had filed an enforcement action against that deal. That action was resolved by a settlement agreement that relied in part on oversight by the Federal Communications Commission of a variety of deal conditions. By contrast, the FCC has said it does not see itself as having a role in reviewing the AT&T/Time Warner deal because Time Warner will not have to transfer any of its FCC licenses to AT&T as part of the transaction.

AT&T's "attempt to use the Comcast-NBCU transaction as the basis for their selective enforcement claim is ... unavailing," Leon said, adding that the same goes for AT&T's "efforts to distinguish this enforcement action from the government's treatment of vertical mergers generally."

Leon also pointed to the government's argument that although the Justice Department has generally allowed vertical transactions, there have been instances where the agency blocked certain combinations or required divestitures as a condition for a deal. "So while it may, indeed, be a rare breed of horse," Leon said, "it is not exactly a unicorn!"

A trial date for the larger case is set for March 19.