AT&T/TW Needs Structural Fixes Because of Lack of FCC Oversight, DOJ Says
Lack of an FCC role in AT&T's proposed buy of Time Warner is a key reason the proposed Turner arbitration terms (see 1711280063) aren't sufficient as a fix of noncompetitive harms the deal raises, DOJ said in docket 17-cv-02511-RJL post-trial…
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brief (in Pacer) filed Tuesday. The U.S. and the court never before lacked FCC assistance in crafting and supervising behavioral conditions, Justice said, calling Turners' arbitration offer "half baked." It said being part of New AT&T would be the "end of Time Warner's agnosticism" on distributors since New AT&T wouldn't want TW content distributed in ways that put more competitive pressure on AT&T-owned DirecTV. Justice said the companies are trying to "rewrite" merger law by carving out "a safe harbor for 'minor' price increases" when Section 7 of the Clayton Antitrust Act focuses on harms to competition and not on the individual consumer, while annual harms of hundreds of millions of dollars "plainly evidences a 'substantial' distortion of the competitive process." It said FCC program access rules won't prevent anticompetitive harms from the deal, since the agency's Comcast/NBCUniversal order adopted remedies because it didn't consider program access rules sufficient to prevent price increases. The department said the court should opt for either a permanent injunction or targeted divestiture, with the options for the latter ranging from a targeted divestiture of Turner to a targeted divestiture of DirecTV. It said behavioral remedies are less effective at protecting competition than structural ones since they can't foresee all possible routes of improper influence over the acquired company. DOJ finds no examples of any Section 7 case in which the court ordered only behavioral relief over the U.S.' objections that survived appellate review. The companies filed their post-trial brief last week in U.S. v. AT&T and TW (see 1805040002).