February 16, 2018 / 11:03 PM / a month ago

U.S. seeks to block AT&T from citing Trump opposition in merger lawsuit

WASHINGTON (Reuters) - The U.S. Department of Justice on Friday moved to prevent AT&T Inc (T.N) from arguing that politics played a role in the government’s decision to stop its merger with Time Warner Inc (T.N), a deal that President Donald Trump had publicly criticized.

An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni

“There was no selective enforcement,” Justice Department lawyer Craig Conrath said at a pre-trial hearing. “The president is unhappy with CNN. We don’t dispute that. But AT&T wants to turn that into a get-out-jail-free card for their illegal merger.”

AT&T and Time Warner’s lawyer Daniel Petrocelli, however, cited Trump’s repeated criticism of the deal as reason to allow the company to argue that the government opposed the deal for political reasons. It is seeking records of communications between the White House and Justice Department that describe Trump’s views on the merger.

AT&T wants the judge to review any communications found to see if they bolster their contention that the transaction was singled out because of Trump’s anger with CNN.

The documents were requested as preparation for a March 19 trial in which Judge Richard Leon will decide if the $85 billion deal would raise prices. The Justice Department sued to stop the deal on the grounds that it is illegal under antitrust law.

The government has asked Judge Leon to rule that AT&T may not cite politics, formally known as selective enforcement, as a defence and to quash a request for documents to support that defence.

AT&T’s Petrocelli defended the request. “If there is something in those documents, it’s important for us,” he said at the hearing at the U.S. District Court for the District of Columbia.

Leon said he would rule on Tuesday.

The deal has been followed more closely than most antitrust matters because Trump attacked it while on the campaign trail in 2016. Trump has also repeatedly criticized Time Warner’s CNN news network and, in November, he reiterated his opposition to the proposed transaction.

Conrath said the government’s lawsuit was not motivated by Trump’s irritation with CNN and said it had offered several settlement options that would have allowed AT&T to acquire CNN.

As recently as November, Trump stood by his criticism of the proposed transaction.

“Personally I’ve always felt that that was a deal that’s not a good deal for the country,” the president said. “I think your pricing’s going to go up, I don’t think it’s a good deal for the country.”

    Conrath warned that if the Justice Department were forced to conduct a much broader search for additional documents it could delay the trial until July. Leon also said he did not want the case to get “sidetracked.”

    “We have no intention of losing this schedule,” Petrocelli said.

    Petrocelli said Time Warner CEO Jeffrey Bewkes had laid out in extensive detail the company’s belief that Trump’s improper influence was a factor in a deposition Thursday.

    AT&T had taken the unusual step of including the assistant attorney general for antitrust, Makan Delrahim, on its witness list as it looks to find evidence to support its position that the government was bringing a case because of Trump’s anger.

    Conrath offered an affidavit from Delrahim in which he said he had not been instructed or ordered by anyone at the White House or at the Justice Department to bring the lawsuit.

    Merger cases, however, are judged illegal or legal depending on whether prices go up or innovation is lost because of the deal.

    Petrocelli derided the government’s case as “weak,” saying that their economists had determined the price of AT&T’s DirecTV could go down and that there could be a small increase to non-DirecTV consumers. Conrath sharply disagreed, saying the deal would cause “hundreds of millions of dollars of damage.”

    Reporting by Diane Bartz and David Shepardson; Writing by Susan Heavey; Editing by Jonathan Oatis and Chris Reese

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