Legal Issues

by Karl Bode


Filed Under:
competition, doj, fcc, merger

Companies:
at&t, time warner



After AT&T Jacks Up Prices Post Merger, DOJ Decides To Appeal Court Loss

from the if-at-first-you-don't-succeed... dept

AT&T recently defeated the DOJ's challenge to their $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality to dominate smaller competitors. In fact, net neutrality was never even mentioned at the multi-week trial.

The trial did a wonderful job showing how modern antitrust law does a dismal job policing companies that dominate both the conduit to the home (wireless, wired connection) and the content running over it. And shortly after Leon signed off on the deal, AT&T got right work... being AT&T.

The company had made repeated promises before, during and after the trial that the merger would only result in price reductions and other wonderful things for consumers. But with the ink barely dry on the deal, AT&T quickly began raising rates on its streaming video services, eliminating promo offers providing free HBO to its wireless customers, jacking up the price of the company's unlimited data wireless plans, and imposing bogus new fees on those same subscribers. Most of these moves were expected as AT&T tries to recoup some of the monumental debt incurred by its endless quest to grow ever larger.

Initially, the DOJ stated it wouldn't appeal its court loss, even though Leon's myopic ruling opened the door to the idea. But the DOJ clearly sees something in AT&T's recent moves that gives it additional ammunition for another shot at the merger, so it's appealing the judge's ruling to the United States Court of Appeals for the District of Columbia Circuit according to a DOJ filing (pdf).

AT&T, for its part, doesn't seem particularly worried and believes the merger is a done deal:

"We think the likelihood of this thing being reversed or overturned is really remote,” Mr. Stephenson told CNBC Friday in an interview at Allen & Co.’s annual Sun Valley, Idaho, media conference. “The merger is closed. We own Time Warner."

That may or may not be true. Antitrust law has been so weakened over decades that the DOJ spent most of the first trial narrowly confined to strict corridors of economic theory as it tried to prove the obvious: AT&T's ownership of Time Warner will result in AT&T jacking up licensing costs for must-have content like CNN and HBO for its video (traditional cable and streaming) competitors. Patchy antitrust laws ill-suited for the mega-Comcast era aren't magically being fixed before the next legal battle, meaning it's pretty likely the next round won't go much better for the DOJ than the first.

That said, AT&T's price hikes do provide some additional ammunition. The DOJ might also want to actually mention net neutrality this go round. The agency likely avoided the concept the first time around because it didn't want to emphasize that while it was suing AT&T to "protect consumers" (though Trump's disdain for CNN and Rupert Murdoch's opposition to the deal for competitive reasons are just as likely motivators), another arm of the government (Ajit Pai's FCC) was busy eroding net neutrality rules making it easier than ever for AT&T to behave anti-competitively.

If you've watched AT&T do business for any more than five seconds, it's obvious the death of net neutrality is the lynch pin for AT&T's anti-competitive ambitions moving forward. While certainly a bit off the traditional antitrust track, at least mentioning that fact at some point during the trial might just be a good idea for the DOJ during the next round.


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  • icon
    Anonymous Anonymous Coward (profile), 13 Jul 2018 @ 2:12pm

    Where's the stay?

    The part I am not understanding is why the DOJ did NOT request a stay? They had to know at the time what AT&T would do. They had to know that the ruling left doors open. And they knew, but did not act upon the various economic theories that the failed to present to the court.

    I can think of two possibilities. The DOJ is inept. Or they are playing a long game, and expect to lose, which makes the whole appeal merely an affirmation of their 'seriousness' in their attempt at preventing the merger.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Jul 2018 @ 1:54am

      Re: Where's the stay?

      If only we knew... Wall Street has been unusually filled with opacity and strange occurances since Trump took office and the deregulation, while obviously good for the law-abiding in the short term, is double good for the fraudulent as time goes by.

      The current administration seems to have one target only: Search and destroy oversight and regulation. DOJ, CFPB, FCC and to a lesser extend FBI, CIA and others are being gutted and if Trump could: Removed.

      Many parts of the administration and "the party" is fighting DOJ since they wont swear off evidence-based conduct for alllegience to MAGA. Having DOJ suicide on failing anti-trust is merely causing dry tears and a good punching bag for the religiously awakened.

      reply to this | link to this | view in chronology ]

  • icon
    unrulycow (profile), 13 Jul 2018 @ 2:37pm

    Perjury

    If they said in court that they wouldn't raise prices after the merger, and then immediately raised prices, wouldn't that be perjury?

    reply to this | link to this | view in chronology ]

    • identicon
      Thad, 13 Jul 2018 @ 2:52pm

      Re: Perjury

      Probably not.

      They probably couched it in language like "there are no plans at present to raise prices", and made damn sure there was no paper trail that could prove any actual plans to raise prices. So they can say that there weren't any plans to raise prices at the time, and it's just a crazy coincidence that they made such plans immediately after the merger was finalized.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Jul 2018 @ 3:02pm

      Re: Perjury

      If they said in court that they wouldn't raise prices after the merger…

      If AT&T was at all worried about how this looks, then they would've waited six or eight months before they raised prices.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 13 Jul 2018 @ 4:12pm

    Appeals

    The DOJ might also want to actually mention net neutrality this go round.

    Can they do that? "This go round" is an appeal, and courts generally frown on people adding new arguments during an appeal. Appeals normally focus on mistakes made by the court, not stuff the prosecution neglected to mention.

    A post-merger change in behavior could certainly result in antitrust charges, but that would be a new trial.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Jul 2018 @ 5:28pm

      Re: Appeals

      … courts generally frown on people adding new arguments during an appeal.

      My bet is that the appeals court won't let DoJ point out that AT&T actually raised prices. Instead, the appeals court will insist that the proper time to bring that up was at trial, and since DoJ didn't prove it then and there, everything actually shows the merger will lead to lower prices.

      Many, many people will not understand the appeals court's reasoning. Others will become frustrated trying to explain it to them in commentary. But the many, many people still, obstinately, won't understand.

      reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 13 Jul 2018 @ 6:25pm

    You mean that thing that they promised wouldn;t happen HAPPENDED!!!!!!!!
    How did this happen?!!?
    We've only watched it happen every single time we allowed this to happen in the past.
    It just so happens we are shocked just shocked.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jul 2018 @ 12:43am

    Wow, imagine that! out_of_the_blue's favorite DOJ actually doesn't like it when out_of_the_blue's AT&T acts the way out_of_the_blue likes it to. What a corporatist out_of_the_blue is!

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jul 2018 @ 5:30am

    Not only have they raised the fees there but also on internet only accounts.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jul 2018 @ 9:32am

    Well, obviously it the fault of the customers for continuing to pay the crooks. /s jic

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jul 2018 @ 9:17pm

    Initially, the justice dept said they would not pursue a stay. They never said they would not pursue an appeal.

    As the trial judge noted in his decision, a stay would cause damage even though AT&T won, when appeal courts have no problem unwinding a merger later on if the district court ruling is reversed.

    This merger was approved without conditions. Most of the legal analysis I hear think that this appeal can at best produce some modest conditions, and not a reversal of the merger itself.

    reply to this | link to this | view in chronology ]

  • icon
    tom (profile), 15 Jul 2018 @ 3:56pm

    The DOJ should introduce as evidence the previous statements by AT&T officials and lawyers made under oath that rates would go down. Followed by charges of perjury against said lawyers and officials since rates went up.

    reply to this | link to this | view in chronology ]


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