FINANCIAL POST

JUDGE RULES TRIO SHOULD BE DEEMED CHILD’S PARENTS.

In the first decision of its kind in Canada, all three adult members of a polyamorous family have been recognized as parents of a child.

Two months ago, Justice Robert Fowler of the Newfoundland and Labrador Supreme Court (Family Division) in the case of Re C.C., decided the adults would be named as parents of the child born within their three-way relationship.

In the introduction to his decision, Justice Fowler described the unconventional St. John’s household: “J.M. And J.E. are the two male partners in a polyamorous relationship with C.C., the mother of A., a child born of the three-way relationship in 2017. The relationship has been a stable one and has been ongoing since June 2015. None of the partners in this relationship is married and, while the identity of the mother is clear, the biological father of the child is unknown.”

He encouraged the government to seek an appeal on the merits if it desired. The Justice Department’s antitrust chief, Makan Delrahim, said he was disappointed and will consider the government’s next steps.

Leon described part of the government’s case as “gossamer thin,” saying the Justice Department’s expert witness declined to back some of the government’s own theories.

“I conclude the government has failed to meet its burden of proof,” Leon said.

In denying any attempt by the government to seek a stay of his ruling during appeal, Leon said AT&T and Time Warner “understandably fear the government will now seek to do indirectly what it couldn’t accomplish directly.”

Leon said the government’s theory that the merger would give the combined company too much leverage in programming negotiations was “plagued by inconsistencies” and contradicted by the Justice Department’s own evidence. The judge found similar deficiencies in the government’s other theory of harm to customers: that the deal would stunt streaming services and prevent competitors from gaining access to HBO.

Leon’s decision is a blow to Delrahim. The government’s November lawsuit was the first major merger challenge under President Donald Trump, who railed against the tie-up during the 2016 campaign. He vowed his administration would oppose it, and as president, has relentlessly attacked CNN.

His criticism prompted speculation the lawsuit was politically motivated. Still, the Justice Department’s case laid out a traditional antitrust theory: that combining two companies in different parts of a supply chain can give the merged company the ability to harm rivals.

The suit stunned investors and lawyers because it broke past practice for reviewing such deals, known as vertical mergers. Rather than negotiating an agreement that imposes conditions on AT&T, Delrahim demanded AT&T sell businesses to address threats to competition, which the company refused to do.

After Delrahim took over the division, he announced that the department would require asset sales to remedy harm to competition from vertical deals. Leon’s ruling raises the question of whether Delrahim can successfully maintain that stance.

The Justice Department claimed that AT&T’s acquisition of Time Warner would give the No. 1 pay-TV provider increased bargaining leverage over rivals like Dish Network Corp. that pay for Time Warner programming.

Because of AT&T’s ownership of DirecTV, it can drive a harder bargain with other distributors that want Time Warner content, the government’s lawyers argued. If negotiations break down and rivals can’t secure that programming, their customers could switch to DirecTV, the lawyers said. That leverage would allow AT&T to raise prices for Time Warner content, with those costs being passed on to consumers.

The government’s case hinged on a model produced by Carl Shapiro, an economist at the University of California at Berkeley, who predicted an annual price increase to consumers of at least US$285 million. AT&T attacked that as baseless. The judge indicated during the trial that he wasn’t buying Shapiro’s projection. After his testimony, Leon said he was “confused.” Further explanation from Shapiro didn’t help.

“I’m not sure I got it, but it’s too late and too hot to belabour the point any further,” the judge said.

IT’S TOO LATE AND TOO HOT TO BELABOUR THE POINT ANY FURTHER.