DOJ's Delrahim Promotes 'AT&T-Time Warner Doctrine' in Mexico

Talks up need for divestitures in combos of distribution and programming in all but 'rare' cases
Author:
Publish date:

Department of Justice antitrust chief Makan Delrahim Wednesday put an exclamation point on what might now be called the AT&T-Time Warner Doctrine given the confluence of that case with Delrahim's emphasis on spin-offs versus conditions in vertical mergers: "If a structural remedy isn’t available, then, except in the rarest of circumstances, we will seek to block an illegal merger."

Makan Delrahim

Makan Delrahim

That came in a speech to the Federal Institute of Telecommunications Conference in Mexico City on enforcing antitrust in the digital age.

In seeking to block the AT&T-Time Warner merger, Makan has said that it was because structural remedies (asset divestitures) not behavioral remedies like program access and oversight conditions were necessary.

Delrahim: Antitrust Can Still Get at New Business Models

He preached the necessity of that approach to the Mexican audience, according to a copy of his speech. "Behavioral remedies present three main problems, he said. "The first is that they are inherently regulatory, which is to say that they substitute central decision making for the preferred free market. The second reason is closely related to the first: The Antitrust Division is a law enforcer and, even where regulation is appropriate, it is not equipped to be the ongoing regulator. The third reason that behavior decrees are problematic is that they are merely temporary fixes for an ongoing problem."

He conceded that content platforms like Netflix, Amazon, Hulu and YouTube have led to an "explosion of new content" from which to choose, which made it easier to approve a Disney/Fox deal than in the past. 

But he said the same facts could lead to greater concern in other kinds of mergers, AT&T-Time Warner for example.

"For instance, a merger that combined a significant content creation company with a significant content distribution company might raise the prospect of foreclosure," he said. "Independently, each side of the merger may have had the incentive but not the ability to harm its horizontal rivals. Together, depending on the circumstances, the combined company may have both the incentive and the ability to harm its rivals, and ultimately consumers."

That was DOJ's argument in trying to block the AT&T-Time Warner deal as anticompetitive, and now in appealing the decision of a federal district court that DOJ had not made that case.

Delrahim cited the Dec. 6 oral argument in that appeal, but did not handicap DOJ's chances for success.

Related