AT&T Gains Upper Hand On DOJ In Appeals Court Arguments Of Lawsuit Over Time Warner Deal

A panel of three judges hearing the government’s appeal of a ruling backing AT&T’s acquisition of Time Warner peppered a Department of Justice lawyer with critical questions, going notably easier on his opponent speaking for AT&T.

This morning’s nearly two-hour session at the District of Columbia Circuit of the U.S. Court of Appeals included solo appearances by lawyers for both sides as well as “amici” representatives of antitrust experts and academics. No witnesses were called, in keeping with appellate court procedure.

Representing the DOJ, Michael Murray faced a steady stream of questions as he attempted to show that U.S. District Court Judge Richard J. Leon made clear errors in his June ruling.

The arguments are a key stage of the appeal in the lawsuit filed in the fall of 2017 aiming to block the $81 billion merger. The judges did not rule at the close of the arguments, per appellate court procedure. They are now expected to take a period of weeks to render their decision, to either affirm Leon’s ruling (meaning the merger stands) or to remand the case back to Leon, where the deal could face more hurdles or even be unwound.

Undoing the deal doesn’t seem a likely outcome based on the arguments. “The problem is, where was the evidence to show that the district court clearly erred?” asked Judith W. Rogers at one point, before advising Murray, “It’s not enough to cite the principle. You have to show it fits within the context.”

During his initial 20-minute allotment of time, Murray rarely was able to speak for more than a few seconds at a time before being interrupted by one of the judges. They seemed particularly vocal on the matter of whether the DOJ could prevail in its complaint merely by demonstrating that the economic harm is “anything than zero.”

“The government had to show that the proposed merger was likely to substantially lessen competition by increasing Turner’s bargaining leverage in affiliate negotiations,” Rogers continued. “Some of those adverbs appear to be flying in the face of your statement that if all the numbers aren’t zero, you win.”

Judge David B. Sentelle also scolded Murray for contending that “if the number is anything greater than zero, you’ve carried your burden. That doesn’t follow.” He added, “Remember where the burdens are.”

Speaking on behalf of AT&T, Peter Keisler leaned on a key pillar of the defense argument during the trial last spring, emphasizing the seven-year offer of baseball-style arbitration that Turner has offered programmers. The goal of that offer is to ensure that DirecTV wouldn’t be able to use Turner as a weapon to punish rivals.

“We will honor it. The other side will invoke it. And it will have real world effects,” Keisler said. And Turner will have “less leverage as a result of a merger.”

He added, “That is one thing by itself that should be enough to resolve the case.”

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