AT&T Seeks Justice “..pitched legal battle between a corporate giant and an unorthodox administration..” By Todd Horwitz, Bubba Trading

 

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JUSTICE FOR AT&T

AT&T is reportedly thinking about calling the head of the Justice Department’s antitrust division to testify in a trial over the government’s effort to block the telecom’s $85 billion acquisition of Time Warner. In an unprecedented move, AT&T may call Makan Delrahim to testify at the trial, according to The New York Times and The Wall Street Journal. It is highly unusual for government officials to be listed as witnesses in such cases, but this is no ordinary antitrust trial. In the months since the Justice Department sued to block the deal last November, AT&T has publicly questioned the department’s motives in light of President Donald Trump’s campaign pledge to disallow the merger and his repeated disparagement of CNN, a unit of Time Warner.

AT&T could choose not to call Mr. Delrahim at trial. But if he has called, it could escalate tensions in a dispute that already has seen its share of tense moments and is shaping up as a pitched legal battle between a corporate giant and an unorthodox administration whose president is given to off-the-cuff comments. The trial, scheduled to start March 19, represents one of the biggest antitrust cases in a generation. Legal observers said they couldn’t recall a situation in which merging companies sought court testimony from the government official who made the decision to sue them. “It’s quite remarkable that they listed him,” said Wayne State University law professor Stephen Calkins.

AT&T has amassed a considerable army of litigators and more than 100 lobbyists to win its case. Its top litigator, Daniel M. Petrocelli, defended Mr. Trump in a lawsuit involving Trump University. Time Warner has hired Christine A. Varney, the former head of the Justice Department’s Antitrust Division. The decision by Mr. Delrahim, a former White House counsel, to deny a merger of two companies that do not directly compete was unexpected given that similar deals have previously been approved. The Justice Department has argued that the merger of two giant companies that both produce content and distribute those shows will lead to higher prices for consumers.

AT&T and Time Warner’s main defense will likely focus on what they see as the deal’s potential benefits to media consumers and advertisers. They say integrating AT&T’s video and wireless distribution with Time Warner’s movie and television content will allow the new combined company to compete with disruptive companies like Netflix, Google and Amazon that are offering video content in nontraditional ways.

AT&T also emphasizes that its deal is a “vertical” merger of complementary companies, rather than one that eliminates a direct competitor. The Justice Department hasn’t litigated a challenge to a vertical merger in decades, though it came close to doing so during the Obama administration and has imposed conditions on some vertical deals, including Comcast Corp.’s takeover of NBCUniversal. “If AT&T’s strategy is to call Delrahim to testify for the purpose of showing political motivation, it could blow up in their face if the assistant attorney general is a credible witness for the legitimate challenge of the merger,” said Gene Kimmelman, a former senior antitrust official in the Justice Department who has been critical of the deal. “Unless they have a smoking gun, I think Delrahim has a convincing argument.”

Keep those stops tight
Todd “Bubba” Horwitz

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.