By David Shepardson
WASHINGTON (Reuters) – The U.S. Justice Department said on Thursday it would appeal a federal judge’s approval of AT&T Inc’s
AT&T was sued by the Justice Department on antitrust grounds, saying that the deal would harm consumers, but U.S. District Judge Richard Leon last month approved the deal, allowing it to move forward following a lengthy trial. The merger, first announced in October 2016, was also opposed by President Donald Trump.
Leon ruled that the tie-up between AT&T’s wireless and satellite businesses with Time Warner’s movies and television shows was legal under antitrust law.
AT&T Chief Executive Randall Stephenson told reporters on Thursday at a conference in Sun Valley, Idaho, that the company was not surprised about the Justice Department’s decision to appeal.
“They have the right to appeal. Everyone has the right to appeal. We have a very fact-based thoughtful order. It will be evaluated on those grounds,” he said.
A Justice Department spokesman declined to comment.
The Justice Department opted in June not to seek an immediate stay of the court’s approval of the merger, allowing the deal to close on June 14. The Justice Department still had 60 days, however, to appeal the decision approving the merger.
The government’s notice of appeal filed in U.S. District Court in Washington did not disclose on what grounds it intends to challenge the approval.
Michael Carrier, an antitrust expert at Rutgers University, said the Justice Department could challenge Leon’s analysis of the facts of the case, the economic arguments given or what Carrier described as an apparent pro-defendant approach by the judge.
Leon had sharply urged the Justice Department not to seek a stay of his ruling, saying it would be “manifestly unjust” to do so and not likely to succeed. In his ruling, he said the government had failed to show competitive harm.
AT&T told the Justice Department in a June 14 letter that it would manage Time Warner’s Turner cable television networks as part of a separate business unit and take other steps until February 2019 or until any government appeal.
AT&T also said that in the short term, it would have no role in setting Turner prices and the number of Turner employees and target compensation and benefits would remain “largely unchanged.” AT&T also said it would implement a firewall between Turner and AT&T to prevent the exchange of sensitive information of unaffiliated programmers or distributors.
In 2016, the Justice Department had demanded that AT&T sell the Turner networks, which include CNN, as part of approving the merger.
John Bergmayer, senior counsel at advocacy group Public Knowledge, said that since the deal was approved, AT&T had raised prices for some video and wireless services.
“The AT&T-Time Warner transaction is a bad deal for consumers and competition,” he said. “Judge Leon’s decision contained numerous errors, and we believe the DOJ’s position should be vindicated.”
Deals approved by a federal judge have been undone on appeal in the past.
In 2001, H.J. Heinz Co called off its acquisition of Beech-Nut after an appeals court overturned a lower court’s decision to allow the merger. The Federal Trade Commission had argued the deal would have merged the No. 2 and No. 3 baby food makers and that competition would be “lessened substantially” if it were to go forward.
(Reporting by David Shepardson; Additional reporting by Carl O’Donnell in Sun Valley, Idaho; Editing by Leslie Adler and Peter Cooney)