Opposition to AT&T acquisition smacks of politics
As a general rule, Republicans and Democrats see antitrust matters differently. Republicans tend to favor a light touch on mergers and acquisitions, while Democrats are more likely to step in if they see a threat to competition.
This was vividly illustrated in 2001, when the incoming Bush administration brought a quick end to the landmark case against Microsoft filed by the Clinton administration.
Why, then, is the Trump administration poised to take a hard line against AT&T’s proposed acquisition of Time Warner?
The legal grounds for a court challenge are weak, so the most plausible explanation is President Trump’s oftstated grudge against CNN, which is part of Time Warner’s Turner Broadcasting unit.
Ever since the Nixon administration secretly meddled in antitrust policy, both parties have tried to keep raw partisan politics out of it. Presidents appoint certain types of lawyers to head the Justice Department and Federal Trade Commission antitrust units, then leave them alone to conduct independent reviews that follow the facts and the law.
At least that was the practice until Trump became president.
From a legal standpoint, the pending Justice Department challenge is puzzling. In fact, Trump’s top antitrust enforcer at Justice, Makan Delrahim, told an interviewer last year — before joining the administration — that he did not see any problem with the merger.
And why would he? “Vertical” mergers linking two adjacent industries raise far fewer red flags than “horizontal” mergers of competing companies in the same industry. AT&T, a telecommunications company, and Time Warner, a content provider, have virtually no competing business lines.
Now, however, Delrahim has inexplicably reversed course, joining Trump, who has long vented against both CNN and this merger, and a small coalition of liberal consumer groups that oppose most high-profile corporate combinations.
According to published reports, the Justice Department has told AT&T that the company would need to divest either DirecTV, or buy Time Warner minus Turner Broadcasting, to get the deal approved.
None of this makes any sense outside of political vendettas. Turner Broadcasting is fairly small potatoes in terms of market power. And barring a combination of DirecTV with a slew of television channels would fly in the face of precedent.
The Obama administration, which earned a reputation for relatively tough antitrust enforcement, allowed a similar merger of media and content when it signed off on Comcast’s purchase of NBC Universal.
If the AT&T-Time Warner case goes to court, the Trump administration is highly likely to lose, but not before wasting a lot of taxpayer and shareholder money on legal fees.