A vic­tory for Amer­i­can con­sumers

How the Dis­ney-Fox an­titrust set­tle­ment pro­tects com­pe­ti­tion

The Washington Times Daily - - OPINION - By Makan Del­rahim Makan Del­rahim, as­sis­tant at­tor­ney gen­eral for the U.S. Depart­ment of Jus­tice An­titrust Di­vi­sion, pre­vi­ously served as deputy as­sis­tant to the pres­i­dent and deputy White House coun­sel.

As the as­sis­tant at­tor­ney gen­eral in charge of the An­titrust Di­vi­sion of the U.S. Depart­ment of Jus­tice, I am com­pelled to re­spond to The New York Times edi­to­rial board’s base­less con­tention that it is “harder and harder to be­lieve” that an­titrust en­force­ment de­ci­sions are based on facts and law rather than pol­i­tics. This view re­lies on a fun­da­men­tal mis­un­der­stand­ing of merger re­view and mis­char­ac­ter­izes the re­cent AT&T-Time Warner and Dis­ney-Fox en­force­ment ac­tions.

On June 27, the Di­vi­sion an­nounced that af­ter six months of re­view, The Walt Dis­ney Com­pany agreed to di­vest 22 Re­gional Sports Net­works in or­der to ac­quire cer­tain as­sets from Twenty-First Cen­tury Fox, Inc. If a fed­eral court ap­proves it, the set­tle­ment will re­quire di­vesti­tures in mar­kets where Dis­ney and Fox com­pete for ca­ble and satel­lite dis­tri­bu­tion, pre­serv­ing ca­ble sports pro­gram­ming com­pe­ti­tion, as the an­titrust laws re­quire.

This is a vic­tory for Amer­i­can con­sumers and should be her­alded as an ex­am­ple of merger par­ties work­ing ef­fec­tively with Di­vi­sion in­ves­ti­ga­tors to re­solve an­titrust con­cerns. In­stead, The New York Times laments that the Di­vi­sion went “easy” on Dis­ney-Fox, ap­par­ently be­cause the edi­to­rial board be­lieves the in­ves­ti­ga­tion should have taken longer than six months, or be­cause it should have pro­ceeded to a trial, like the AT&T-Time Warner merger.

The Times sug­gests that be­cause the Di­vi­sion “spent nearly two years” in­ves­ti­gat­ing and lit­i­gat­ing the AT&T-Time Warner deal, and just six months re­view­ing and ul­ti­mately reach­ing a pro­posed set­tle­ment with Dis­ney, the mo­ti­va­tions un­der­ly­ing both en­force­ment de­ci­sions should be called into ques­tion. The Times’ com­par­i­son rests on a false premise.

First, the Times’ de­scrip­tion of the tim­ing is in­ac­cu­rate. AT&T an­nounced its ac­qui­si­tion of Time Warner in Oc­to­ber 2016. The Di­vi­sion sued to block the merger in Novem­ber 2017, which was only eight months af­ter the par­ties com­plied with the Di­vi­sion’s for­mal re­quests for in­for­ma­tion rel­e­vant to the trans­ac­tion. More­over, AT&T knew within six months of pro­duc­ing doc­u­ments that the Di­vi­sion found parts of the pro­posed trans­ac­tion anti-com­pet­i­tive.

While The Times sug­gests that deals of this size usu­ally re­quire a year for an­titrust re­view, it ig­nores that each merger poses unique facts re­quir­ing unique mar­ket anal­y­sis. The pace of any re­view is largely in the hands of the merg­ing par­ties, who con­trol the tim­ing of their Hart-Scot­tRodino fil­ings, as well as the pace and tim­ing of com­pli­ance with the Di­vi­sion’s in­for­ma­tion re­quests. Par­ties can ac­cel­er­ate the re­view by point­ing the Di­vi­sion to rel­e­vant in­for­ma­tion early in the in­ves­ti­ga­tion, promptly sched­ul­ing in­ter­views, and re­main­ing open to timely di­vesti­tures that re­solve an­titrust con­cerns.

No ob­jec­tive ob­server can de­scribe the An­titrust Di­vi­sion’s in­ves­ti­ga­tion and suit 13 months af­ter an­nounce­ment of the AT&T-Time Warner deal — the largest telecom­mu­ni­ca­tions merger in his­tory — as out­side the norm. If the Di­vi­sion had sim­ply ap­proved the AT&T-Time Warner merger, how­ever, the edi­to­rial board no doubt would have crit­i­cized the Di­vi­sion as fail­ing to en­force the na­tion’s an­titrust laws. If the Di­vi­sion reached a set­tle­ment, the same edi­to­rial board likely would have called for an in­ves­ti­ga­tion of the Di­vi­sion’s mo­tives on sim­i­larly friv­o­lous grounds.

The bot­tom line is this: The Di­vi­sion dis­charges its law en­force­ment du­ties faith­fully and with­out re­gard to pol­i­tics or the po­lit­i­cal af­fil­i­a­tions of the par­ties. Amer­i­can con­sumers and the busi­ness world win when the Di­vi­sion and merg­ing par­ties eth­i­cally and ex­pe­di­tiously reach a set­tle­ment that pro­tects com­pe­ti­tion. They also win when the Di­vi­sion takes the nec­es­sary time to re­view prob­lem­atic merg­ers and ex­haust all ef­forts to set­tle a case be­fore su­ing to block a trans­ac­tion.

In AT&T-Time Warner, lit­i­ga­tion was not the Di­vi­sion’s first choice. The Di­vi­sion made mul­ti­ple set­tle­ment of­fers in­volv­ing di­vesti­tures, but the par­ties of­fered and would ac­cept only so­called “be­hav­ioral” reme­dies in­volv­ing prom­ises to re­frain from an­ti­com­pet­i­tive con­duct.

In Dis­ney-Fox, by con­trast, the par­ties’ will­ing­ness to work co­op­er­a­tively with the Di­vi­sion, of­fer­ing up the very types of di­vesti­tures which the Di­vi­sion could rea­son­ably ex­pect to achieve through lit­i­ga­tion, re­sulted in an ef­fi­cient con­clu­sion af­ter six months of re­view. Such suc­cess­ful re­sults should be praised rather than politi­cized by The Times edi­to­rial board. Such politi­ciza­tion does a se­ri­ous dis­ser­vice to the Amer­i­can pub­lic.


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