Last November, the Department of Justice stunned the antitrust world by suing to block AT&T’s acquisition of Time Warner. No such “vertical” deal (between two companies that do not compete directly) had been blocked in four decades. President Trump’s relentless attacks on CNN, Time Warner’s crown jewel, prompted widespread speculation that the DOJ was stretching antitrust law to serve the President’s political agenda. AT&T made this argument in court, asking to cross-examine Makan Delrahim, Assistant Attorney General for the Antitrust Division, about White House interference in a law enforcement action.
Today, the U.S. District Court of the District of Columbia handed AT&T a complete victory — delivering a stinging rebuke to the Trump Administration and handing the DOJ its first loss in an antitrust case since 2004.
“Today’s decision is a victory for the rule of law,” said TechFreedom President Berin Szóka. “This lawsuit was never intended to do what antitrust is supposed to do: protect consumers from the abuse of market power. There’s been a bipartisan consensus for decades that purely vertical mergers are highly unlikely to harm consumers, and that surgical merger conditions can address potential consumer harms. The Trump DOJ simply ignored that consensus. Fortunately, unlike in other areas, this isn’t a policy question; it’s a legal one — with right and wrong answers. The Trump DOJ’s legal and economic theories were so baseless that the court went out of its way to urge the DOJ not to appeal or even to seek a stay upon appeal. This wasn’t a remotely political decision: it was simply an application of well-established antitrust principles to the facts of this case.”
The degree of regulatory uncertainty that had been created by this lawsuit can be roughly approximated by the April decision by the board of 21st Century Fox (21CF) to reject an offer by Comcast to buy most of its assets — despite a whopping $17.6 billion premium (16% per share) over Disney’s offer. The 21CF Board, which has a fiduciary duty to maximize the sale price for its shareholders, claimed that a mostly “vertical” deal with Comcast was more likely to be blocked than a purely “horizontal” deal with Disney, pointing to the Trump DOJ’s lawsuit against AT&T as a source of “regulatory uncertainty.”
“Trump’s meddling in law enforcement actions, his attacks upon particular companies, and his utter unpredictability have created the kind of legal uncertainty common in ‘banana republics,’” continued Szóka. “The fact that 21CF’s board rejected Comcast’s offer tells us that the risk premium is at least 16%. That level of regulatory uncertainty is common in failed states with profoundly corrupt institutions and no stable rule of law.”
“At least in antitrust law, the courts, not Trump officials, will have the final say on what the law really is,” continued Szóka. “Every business in America is safer today from being strong-armed by a would-be strong-man. Everyone concerned about the Trump Administration’s authoritarian tendencies should breathe a little easier — however much they might hate big companies, and favor aggressive antitrust action in theory.
“Unfortunately, antitrust law is very much the exception, with decades of court decisions and a wealth of economic literature to constrain the discretion of the government and limit politicization,” concluded Szóka. Most Trump agencies can exert enormous influence over the companies they regulate. However petty, personal or political their real agenda — like Trump’s vendetta against Jeff Bezos — the courts will grant them broad deference. We’d all be a lot better off if the ‘cold monster’ of the administrative state were subject to something more like antitrust law.”
Read the judge’s decision here. Find this release on our website, and share it on Twitter. We can be reached for comment at firstname.lastname@example.org. See more of our work on this case, the dangers of politicization, and antitrust law, including:
- Tech Policy Podcast #223: Law Enforcement as a Political Weapon, discussing the amicus curiae brief filed by Protect Democracy on the constitutional problems raised by Trump’s potential meddling in the AT&T/Time Warner case
- Our November press release: “DOJ Sues to Block AT&T Time Warner Merger”
TechFreedom is a non-profit, non-partisan technology policy think tank. We work to chart a path forward for policymakers towards a bright future where technology enhances freedom, and freedom enhances technology.