Antitrust

1 4 Therefore, while the administration is in its third year, articulation and demonstrated enforcement of antitrust policies and priorities are continuing to emerge from the two U.S. antitrust agencies. Over the past year, the DOJ and the FTC have both challenged high-profile mergers and prioritized streamlining their merger review procedures, in addition to various other developments, which we highlight below. DOJ CHALLENGES VERTICAL AT&T/TIME WARNER MERGER Since his confirmation in September 2017, AAG Delrahim has expressed a clear preference for structural remedies in antitrust cases, stating that the DOJ would "return to the preferred focus on structural relief to remedy mergers that violate the law and harm the American consumer," and noting that "a behavioral remedy supplants competition with regulation; it replaces disaggregated decision making with central planning." 1 In the past year, nowhere was the DOJ's preference for structural remedies more evident than in its challenge to AT&T/DirecTV's proposed US$85 billion acquisition of Time Warner Inc. 2 The AT&T case was the DOJ's first attempt to litigate a 'vertical' merger case — that is, a combination involving firms operating at different levels in the value chain — in four decades. Vertical merger enforcement is typically prompted by agency concerns that the combined company will have the ability and incentive to harm competition by foreclosing competitors' access to critical inputs, raising rivals' and customers' prices, curtailing innovation or facilitating coordination among competitors. At trial in AT&T, the DOJ's primary argument was that the merger would harm competition by raising rival video distributors' costs on 'must have' Time Warner content. The DOJ also claimed that the combined company could steer customers away from rivals and toward DirecTV, an AT&T subsidiary, by means of a content blackout. In defense, AT&T and Time Warner advanced arguments that the merger would enable the combined company to compete with companies like Netflix, Amazon, Hulu, and Google that are able to leverage consumer data to target advertisements and bolster revenues. In June 2018, Judge Richard J. Leon of the U.S. District Court for the District of Columbia ultimately sided with AT&T and Time Warner, approving the deal without requiring any remedies. In a lengthy and colorful opinion, Judge Leon held that the DOJ failed to meet its burden of proving an anti-competitive effect of the proposed merger. The DOJ subsequently appealed the district court's decision, but the United States Court of Appeals for the District of Columbia Circuit affirmed it. 3 However, the appellate court notably declined to "hold that quantitative evidence of price increase is required in order to prevail on a Section 7 challenge" to a merger, clarifying that "[v]ertical mergers can create harms beyond higher prices for consumers, including decreased product quality and reduced innovation." 4 AT&T highlights both the DOJ's enforcement emphasis on obtaining structural remedies and the difficulty of challenging a merger that does not result in the elimination of a horizontal competitor. Competitive concerns raised by vertical mergers are typically resolved by the government and the merging parties through negotiated remedies, FOREWORD 02 T H E D O J A N D T H E F T C H A V E B O T H C H A L L E N G E D H I G H - P R O F I L E M E R G E R S A N D P R I O R I T I Z E D S T R E A M L I N I N G T H E I R M E R G E R R E V I E W P R O C E D U R E S U.S. Antitrust Enforcement in the Trump Administration

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