AT&T’s legal battle with the U.S. Department of Justice received two major boosts this week when several major pro-business organizations and nine state attorneys general filed separate amicus briefs asking a federal appeals court to approve AT&T’s $109 billion acquisition of Time Warner.
The U.S. Chamber of Commerce, National Association of Manufacturers, Business Roundtable and a handful of other business organizations asked the U.S. Court of Appeals for the D.C. Circuit to uphold a lower court’s decision this past June that AT&T’s purchase of Time Warner did not violate federal antitrust laws.
The pro-business groups cited numerous legal precedents and studies showing that vertical mergers such as this one “generally benefit consumers.” The organizations argue that the appeals judges “should decline the government’s invitation to revolutionize antitrust law’s approach to vertical mergers.”
“Jurists, scholars and the United States have long agreed that the overwhelming majority of vertical mergers increase efficiency,” the 55-page brief states. “For decades, this consensus gave companies confidence that vertical mergers generally are lawful. Courts condemned or modified vertical mergers only in rare cases where they enabled a merged firm to freeze rivals out of essential inputs or a substantial portion of potential customers. And government enforcement actions themselves were sparing.”
The Chamber brief points out that the federal government challenged only a couple of vertical mergers each year and did not bring any such case to trial in the last forty years.
“The Government’s approach to this case has supplanted a clear policy framework and replaced it with a highly uncertain and unpredictable standard, chilling vertical mergers that the Government itself agrees are usually pro-competitive or competitively neutral,” the brief states.
The business groups filed their brief Thursday morning, just hours after a bipartisan group of state attorneys general filed an unprecedented amicus brief late Wednesday announcing their support for the AT&T merger.
Seven Republican attorneys general – Alabama, Georgia, Louisiana, Oklahoma, South Carolina, Utah and Wisconsin – and two Democratic AGs – Kentucky and New Mexico – cited a longstanding practice of state attorneys general to join DOJ’s efforts to stop mergers that they believe will result in harm to consumers through higher prices or reduced competition. For example, then-Texas Attorney General Greg Abbott joined the Justice Department’s lawsuit opposing American Airlines’ merger with US Airways.
The nine state AGs pointed out that no states have sided with the Trump administration in the case against AT&T.
“What is truly unusual, especially in a merger of such national scope, is that not a single state decided to join the federal government’s antitrust action here or file a supporting amicus brief,” Wisconsin Attorney General Brad Schimel, a Republican, wrote in the 25-page brief.
“Given this history, one would expect at least some states to participate in an action involving a merger of this size and scope,” Schimel argued. “History suggests that at least some states would not hesitate to get involved if they believed that the merger would decrease competition and harm their citizens.”
Texas Attorney General Ken Paxton, a major political supporter of President Trump, did not join the friend of the court brief supporting Dallas-based AT&T.
Legal experts say that this may be the only time that state attorneys general have declined to support the DOJ’s antitrust case and instead had states actually opposing the federal government’s actions.
“The district court found that it was undisputed at trial that this vertical merger will produce many millions of dollars’ worth of benefits for consumers by eliminating an additional layer of price markups,” the brief argues.