DOJ blasts judge in AT&T merger case

Court’s ruling ignored ‘common sense,’ government says in laying out its arguments

WASHINGTON — The Justice Department on Monday laid out its case against a federal court’s approval of the AT&T and Time Warner merger, criticizing a judge for “erroneously ignoring fundamental principles of economics and common sense.”

The argument, made to the U.S. Court of Appeals for the District of Columbia, is the start of the government’s second attempt to stop the $85.4 billion deal. The Justice Department lost its case in June, and AT&T and Time Warner, the owner of CNN and HBO, have since hurried to stitch their operations together.

Legal experts say the government faces high hurdles to win its appeal. If it does, the companies could be forced to break apart the combined company. The legal battle could eventually be taken to the Supreme Court.

The central antitrust arguments presented by the Justice Department in the appeal were unchanged from the trial. The antitrust regulators say the combination of a major distributor of entertainment with a creator of video content will harm competitors. AT&T could threaten to withhold Time Warner content or charge higher prices from competitors like Dish Network and Comcast, leading to hundreds of millions of dollars in higher cable bills for consumers, the government argued.

But the Justice Department also plans a sweeping attack of the judge who decided the trial, Richard Leon of the U.S. District Court in Washington. Leon said that the antitrust officials had not adequately proved its claims that competition and consumers would be harmed.

The Justice Department said Leon did not appear to grasp basic concepts of bargaining theory among companies and that he limited the government’s case by excluding some evidence.

“These errors distorted its view of the evidence and rendered its factual findings clearly erroneous, and they are the subject of this appeal,” the Justice Department stated in its brief.

AT&T said it would defend its merger. The company is scheduled to file its argument to the court by Sept. 20. Oral arguments are likely to begin in early fall and the case could be wrapped up before winter.