Judge Signals Seeds of Possible AT&T/TW Settlement Might Fall on Rocky Ground
While the federal judge overseeing the AT&T/Time Warner antitrust trial last week signaled interest in the sides setting arbitration terms that differ from what TW’s Turner offered (see 1804040022), experts told us it’s doubtful DOJ will suddenly find itself amenable to a behavioral condition to fix competition is- sues in the deal. Some see the possibility of U.S. District Judge Richard Leon of Washington imposing that remedy. Others question if that’s possible. DOJ, AT&T and TW didn’t comment.
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Leon has broad discretion to craft remedies to prevent competitive harm, noted a lawyer with MVPD merger and acquisition experience. That lets him choose to allow the takeover, with modified remedies. One possible outcome is Leon ruling for DOJ on liability grounds, imposing his remedy, a former antitrust official said. Another former department employee questioned whether the judge would have the ability to impose a behavioral remedy because unlike a consent decree, it would lack jurisdictional hooks for enforcement.
Leon’s raising the idea of different Turner arbitration terms surely put pressure on DOJ to accept a settlement along those lines, emailed Rutgers Law Distinguished Professor Michael Carrier. Judges frequently signal about routes for settling, though sometimes one or the other side might not be inclined to do so because a settlement can’t be appealed the way an unfavorable decision can, said Robert Lande, University of Baltimore Venable Professor of Law. He said it’s questionable DOJ would go for such a solution since it would constitute a behavioral remedy and Antitrust Division Chief Makan Delrahim is bearish on such solutions in large part because past examples show defendants can circumvent them.
Delrahim has “made it impossible to retreat” to a behavioral condition solution given his public assertions about their efficacy (see 1711160056), Lande said. He said DOJ, while maybe needing to ramp up efforts to convince Leon behavioral remedies don’t work, is hampered because it can’t bring as evidence other cases that involved such conditions because the logistics of retrying those cases would add massive amounts of time to the trial.
A former DOJ antitrust trial lawyer said that the judge, in open court, in a meeting in chambers or in a sidebar meeting, can signal that he thinks the best resolution is some sort of consent decree that includes a modified arbitration mechanism. The judge can’t order that but can signal at the end of the government’s case that the burden of proof hasn’t been met and such a settlement would be good path for Justice, the former DOJ’er said. The parties, particularly the government, decide whether the suit goes forward or whether to negotiate, and while the judge can say he sees a resolution, neither side has to accept that, the lawyer said. DOJ has been attacking the Turner arbitration proposal in its examination of witnesses (see 1803260047 and 1803220033).
In DOJ and FTC parlance, going up in court against a hypothetical arrangement different from the one spelled out in the terms of the transaction is “litigating the fix,” said Shana Wallace, Indiana University Maurer School of Law professor and a former DOJ antitrust division lawyer. She said regardless of whether DOJ or the companies ultimately prevail, it’s not clear an appeal should be expected. If Justice loses, the decision to appeal involves decision-makers including the solicitor general, she said. In case of a loss, AT&T/TW might think twice about appealing depending on Leon’s decision and its reasoning and factual basis, she said, adding that numerous proposed major transactions have never gone further than district court.