Let’s Tackle Real Antitrust Problems. AT&T Isn’t One.
(Bloomberg Opinion) -- Is the U.S. Department of Justice finally done being slapped around for trying to block the AT&T-Time Warner deal? After Tuesday’s rejection of its position by the U.S. Court of Appeals for the District of Columbia Circuit, it sure looks that way. The government had argued that the lower court incorrectly applied antitrust law when approving the deal, but its opposition to the merger was always about politics.
On the merits, it was never a strong case. First, the AT&T-Time Warner tie-up was a so-called vertical merger, meaning that the companies didn’t overlap — and the government hasn’t tried to block a vertical merger in over four decades. It was akin to the Comcast Corp.-NBCUniversal or Verizon-Yahoo! Inc., deals that passed muster despite outcries from consumer groups.
Second, the antitrust department’s complaints about how the merger would be anti-consumer were “gossamer thin,” as U.S. District Judge Richard Leon ruled last June. The Justice Department feared that AT&T would use its new networks, like HBO and TNT, to extract unreasonable price increases from cable distributors. In other words, it looked backward at the world that used to be, instead of looking forward to the world where cable becomes less important and streaming becomes dominant.
When the appeal was heard, the three-judge panel expressed extreme skepticism at the Justice Department’s arguments — “You have to show that there was plain error in the district court,” said one of the judges, clearly implying that the Justice Department hadn’t done so. The verdict that came down Tuesday morning was a surprise to exactly no one.
I’ve written previously that President Donald Trump views antitrust like he views every other aspect of government: as a weapon he can wield to help his friends or hurt his enemies. Trump ally Rupert Murdoch sold 21st Century Fox Inc. to Walt Disney Inc., and the deal flew through the Justice Department with just a minor divestiture (Fox Sports). Time Warner owns CNN, which Trump has repeatedly denounced. That’s the deal the government tried to block.
Makan Delrahim, the head of the Justice Department’s antitrust division, acts deeply offended if you accuse of him of doing the president’s bidding. So let’s give him the benefit of the doubt. There is still a larger issue that Delrahim’s actions suggest that he and his department are not prepared to grapple with.
This is a moment of tremendous ferment in the world of antitrust. Partly this is due to the power of Big Tech, especially Facebook, Google and Amazon. And partly it is due to the tremendous concentration that has taken place in airlines and consumer staples and industries across the board. The former raises questions about whether modern antitrust law is capable of controlling Big Tech. The latter raises questions about whether that concentration has harmed consumers and even furthered income inequality, because worker leverage is diminished.
As a populist, Trump should be embracing this ferment, calling on his Justice Department examine whether the “consumer harm standard” for evaluating antitrust — first popularized by Robert Bork in the 1970s — still makes sense. And he should have an antitrust chief willing to think hard about this issue instead of reflectively hewing to the belief that consumer harm is the only thing that matters. Indeed, Delrahim is on record as saying that Facebook et al pose no antitrust problems.
Over a century ago, President Theodore Roosevelt, another populist, acted to break up the “trusts” that then dominated the economy. His first move was to sue J. Pierpont Morgan’s railroad monopoly for violating the 1890 Sherman Act, which was the nation’s first piece of antitrust legislation.
Today, there are new antitrust ideas making waves among economists. Lina Khan has written a landmark paper about Amazon and why it needs to be reined in. Hal Singer has proposed treating Big Tech differently from other companies. Still others believe the consumer harm standard should remain the law of the land.
A populist president who knew what he was doing would forget about AT&T and push his Justice Department to bring lawsuits that could create new law — law that would help regulate Big Tech and rethink the concentration issue. Of course, that’s the difference between Teddy Roosevelt and Donald Trump. Only one of them understood how to do his job.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is co-author of “Indentured: The Inside Story of the Rebellion Against the NCAA.”
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