Past Words Can Bite, Even for Big Companies Like AT&T
- Risk Compliance
- The Knowledge Group
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The federal Department of Justice and telecom giant AT&T are no friends, by any means. The two entities have been clashing with each other in court since the 1980s when the government broke up Ma Bell and created the genesis of the modern telecom market we know today. However, in the latest round of maneuverings involving the merger of AT&T and Time Warner, Justice gained an unexpected side of the support of the Federal Communications Commission.
The FCC was originally on board with the merger. In fact, the Commission was so supportive, it allowed the merger filing to go through with approver absent what would have normally been an extended and long hearing process open to the public. That left DOJ standing alone in the original court trial against AT&T, and the first battle was lost. For all market watchers, AT&T then had a green light to move forward on its merger, creating what would be the largest communications media giant to date in private business.
However, the federal government was not about to give up after one round. It appealed, and that’s where the FCC decided to revisit the issue filing a motion for the appeals court. The FCC brought AT&T own words back into the fray from previous Commission hearings, bolstering DOJ’s argument that the merger would jack up the cost of programming for consumers. Interestingly, AT&T originally agreed with the same premise in 2010 although it is fighting the argument now in 2018. Words cut both ways apparently. The district court threw out this information believing it had little evidentiary value. The FCC disagrees, in favor of DOJ’s position.
There’s a key point in the value of the past transcripts, according to the FCC. The parties have to be truthful and are under oath. When AT&T agreed its previous merger proposal with Comcast would have ended up raising consumer costs, the FCC accepted the filing as a factual statement. So now, in a similar merger, it makes sense to the FCC the same model applies with AT&T. And the Commission believes the district court failed to acknowledge this point.
The filing is a powerful development in favor of DOJ’s appeal. And if it works, AT&T would find itself in a very messy unwinding of a merger already in action. The case is an ironic twist on a communication company caught in its own past words, much like a celebrity caught in the scandal of past Internet comments.
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