March 21, 2019
Following legal rebuke at the lower federal court and subsequent appeals court level regarding efforts to block AT&T’s $84 billion acquisition of Time Warner, the Department of Justice’s Makan Delrahim, head of the agency’s antitrust unit, said more was learned in defeat than in winning the litigation.
Speaking March 20 at the American Communications Association’s confab in Washington, D.C., Delrahim said legal challenges to future corporate vertical mergers — such as Sprint’s pending merger with T-Mobile — were empowered following the AT&T/Time Warner challenge.
“There are many lessons to be learned from the U.S. v. AT&T,” Delrahim said, according to a recording released by the ACA and reported by Deadline.com. “Given the standard of review that we were facing, [the outcome] wasn’t a surprise. You learn more from losing than from winning.”
Specifically, the executive contends future legal challenges by the DOJ will be based more on structural changes rather than behavior.
Delrahim said the government’s approval of Comcast’s $30 billion acquisition of NBC Universal in 2009 revolved around behavior/consent remedies the cable giant was beholden to follow for a number of years — including silent partnership in Hulu.
Similar regulatory approach to AT&T/Time Warner wouldn’t have been worth the compromise, according to Delrahim.
“The AT&T offer will expire in less than seven years,” he said. “The new market structure [i.e. WarnerMedia] created by the transaction will remain indefinitely. If there’s harm that the arbitration offer is necessary to solve, then there’s likely to be harm in the future that will remain after the arbitration offer expires.”
Delrahim said the silver lining from the appeals court ruling was that some vertical mergers can be harmful to consumers — provided the government proves its case.
“The [appeals court] corrected many of the District Court’s misstatements and articulated a standard that is valuable,” he said.