The Justice Department is challenging a court’s decision to allow the $85 billion AT&T-Time Warner merger, and now it could be getting a small assist from the FCC.
In a court briefing obtained by Ars Technica, the FCC said the U.S. District Court for the District of Columbia may have erred by not allowing previous comments submitted to the FCC by AT&T and DirecTV regarding the 2010 merger of Comcast and NBCUniversal.
"While the Commission takes no position on the relevance of any document in this case, it is concerned that two of the rationales supplied by the district court for discounting the probative value of submissions made to the FCC could reflect a misunderstanding of Commission procedures," the FCC wrote.
In AT&T’s 2010 statements, it argued that allowing a distributor like Comcast and a programmer like NBCU to merge could result in higher programming costs for Comcast’s competitors. The DOJ made a similar argument regarding AT&T and Time Warner during the trial earlier this year. But Judge Richard Leon declined to assign evidentiary value to those statements during the AT&T-Time Warner trial because he said AT&T and DirecTV were acting as competitors to distributors whose competitive positions would be affected by FCC review.
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The FCC jumping in here now is significant for a couple of reasons. First, the FCC had previously declined to review the merger since AT&T did not transfer any FCC licenses.
But it’s also important because, as part of the FCC’s review of the Comcast-NBCU merger, conditions were placed on those companies to ensure that they continued to negotiate carriage deals with competitors in good faith, that they continued carrying unaffiliated programming, and that they continued offering their programming online through third parties.
The AT&T-Time Warner deal was approved with no conditions.
Earlier this month, the DOJ officially filed a briefing outlining its appeal of the court’s decision regarding the AT&T-Time Warner merger. In the DOJ’s appeal document (PDF), the agency warns that the combination of AT&T and Time Warner will allow AT&T to jack up prices on its distributor rivals for Time Warner’s content while also protecting its own distribution businesses from arising competition.
“The district court held otherwise, but only by erroneously ignoring fundamental principles of economics and common sense,” the DOJ wrote. “These errors distorted its view of the evidence and rendered its factual findings clearly erroneous, and they are the subject of this appeal.”