US: FCC: “Court made error in approval of AT&T/Time Warner merger”

The DOJ appealed that court ruling last month, and on Monday the FCC gave the DOJ’s case a small boost. The ruling involved an incorrect conclusion, the FCC stated in its court brief, which was filed at the United States Court of Appeals for the District of Columbia Circuit. “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.

AT&T’s filings with the FCC are required to be truthful even when the company is trying to affect a competitor’s business, the FCC wrote.

“[T]he Commission’s rules require all regulated parties—whether applicants seeking to transfer licenses in connection with a proposed merger or competitors who oppose the merger—to abide by the same standard of truthfulness in adjudicatory proceedings,” the FCC wrote.

FCC rules prohibit both intentional misrepresentations and “inaccurate statements submitted due to negligence,” the FCC stated.

“AT&T and DirecTV were subject to this obligation when they submitted comments in earlier FCC merger proceedings. Thus, there was no reason for the district court to treat those comments as less credible simply because AT&T and DirecTV were ‘competitors’ of the merger applicants in those proceedings (rather than the applicants themselves),” the FCC wrote.

The FCC stated that the district court also erred when it wrote that AT&T and DirecTV filings in the Comcast/NBC merger review “were less probative here” because of differences between the FCC’s public interest review standard and the DOJ’s “‘burden for ‘block[ing] a transaction” under Section 7’ of the Clayton Act.’”

“While it is correct that the Commission’s ‘public interest’ review is broader in certain respects than traditional antitrust analysis, the Commission has historically included competition analysis as one component of its public interest review and has looked to the Antitrust Division’s merger guidelines for guidance when doing so,” the FCC noted in its court filing yesterday.

The DOJ filed its opening brief last week, arguing that the district court “clearly erred when it found the merger was unlikely to have an anticompetitive effect.”

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