AT&T plans to ask a court for any communications between the White House and the Justice Department about the telecommunication giant’s acquisition of Time Warner if the government attempts to block the merger, Bloomberg reports.
The Justice Department has issued a blanket denial that the White House has interfered with its decision to not permit the deal to move forward without significant changes.
“No one from the White House instructed me as to this or any other transaction within the Antitrust Division’s authority,” the Justice Department’s chief antitrust attorney, Makan Delrahim, said in a statement to CNBC.
The White House also denied involvement.
“The President did not speak with the Attorney General about this matter, and no White House official was authorized to speak to the Department of Justice on this matter,” a deputy White House press secretary said in a statement, according to CNBC.
AT&T and Time Warner announced their merger last fall. On the campaign trail, Donald Trump said he would not permit the deal to move forward. But the Justice Department’s rejection of the deal caught the company and many others by surprise. Contrary to some published reports, Justice Department say the did not require AT&T to shed CNN in exchange for approving the deal. Rather they said that AT&T must either divest itself of DirectTV or the Turner Broadcast System, which includes AT&T. In other words, it appears that Justice wants AT&T to chose between content delivery or content creation, likely based on concerns that controlling the full vertical pipeline could give it anticompetitive market power.
Critics of the administration continue to insist that the Trump administration must have directed the Justice Department to block the deal, citing the president’s well-known fued with CNN and Delrahim’s position in the White House Counsel’s office prior to his appointment to the Justice Department.
“It now seems increasingly clear – because of the lack of any credible alternative explanation – that the White House is trying to squeeze AT&T because of the President’s vendetta against CNN,” Josh Marshall of Talking Points Memo wrote in a recent post.
Despite many of these claims, the Justice Department appears to be united around its position. No reports have emerged of dissenting staff attorneys complaining of political influence on the Antitrust Division. Sources familiar with the matter tell Breitbart News that the staff believes it is on solid legal grounds challenging the merger. If the staff attorneys in the Antitrust Division were being railroaded into opposing the deal, this would certainly have been leaked out.
In antitrust legal circles, the AT&T acquisition of Time Warner is considered to be a “vertical” merger, one that brings together businesses at different stages of production, as opposed to a “horizontal merger,” one the brings together businesses that would otherwise compete with each other. Advocates of the deal say that it should have been approved because vertical deals have historically been viewed as posing fewer legal obstacles and having fewer potential anticompetitive effects than horizontal mergers.
But that view may be based on an out-of-date approach to media and technology. The Justice Department’s guidelines on vertical mergers, for instance, were last updated in 1984. And it is now better understood that mergering a creator of entertainment and news content with a distributor of that content may indeed have anti-competitive effects.
AT&T could, for example, decide to give subscribers to DirectTV cheaper access to its own content than those of competitors. In an age of bundled content packages, this is very hard to police after the fact. Likewise, AT&T could make it very expensive for, say, subscribers to the DISH Network to acquire its most demanded content.