T AT&T Inc

By Brent Kendall 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 21, 2018).

WASHINGTON -- A federal judge on Tuesday undercut AT&T Inc.'s plans to argue that the Justice Department is challenging its acquisition of Time Warner Inc. for political reasons, ruling that the company can't have information on internal government deliberations.

AT&T has argued that the government's case was influenced by President Donald Trump's opposition to the deal and his disdain for Time Warner's CNN, a network he has criticized repeatedly.

The Justice Department has denied the charges, accusing the companies at a court hearing Friday of raising a Trump-bias "sideshow" as a way to justify an anticompetitive merger.

The companies said they didn't relish raising the bias issue, but said they had reason to question whether they had been treated fairly. They argue their $85 billion deal won't hurt consumers and shouldn't have been challenged by the Justice Department.

U.S. District Judge Richard Leon's seven-page ruling Tuesday said there are high legal hurdles for defendants seeking access to government communications to build a bias defense and the companies "have fallen far short" of overcoming them.

The companies "have not made a credible showing that they have been especially singled out" by the Justice Department's lawsuit, Judge Leon wrote.

"We are pleased with and respect today's decision, which will permit the parties and court to focus on the case at hand," Justice Department spokeswoman Kerri Kupec said. "This case has always been about protecting consumers from competitive harms, and we look forward to presenting our case at trial on March 19."

Daniel Petrocelli, the lead trial counsel for AT&T and Time Warner, didn't press the issue. "We respect the judge's decision and look forward to the coming trial," he said in a statement.

In defense of the Time Warner deal, AT&T has argued primarily that the transaction would benefit consumers and advertisers and help it compete with disruptive companies like Netflix, Google and Amazon.

From the day it was sued last November, AT&T has also openly questioned the department's motives.

AT&T Chief Executive Randall Stephenson has called the tensions between Mr. Trump and CNN the "elephant in the room," and has noted that the department's antitrust chief, Makan Delrahim, came to the position after serving as a deputy White House counsel for Mr. Trump.

The telecom giant moved recently to put Mr. Delrahim on its witness list for the approaching trial, a highly unusual move. Under questioning from Judge Leon at Friday's court hearing, the company agreed to take Mr. Delrahim off the list, but reserved the right to seek to add him back later if it believed there was good cause for doing so.

Mr. Delrahim was confirmed in late September as head of the antitrust division and announced the decision to sue AT&T seven weeks later. He and the department alleged the vertical combination of AT&T's video distribution with Time Warner's popular cable programming would give the combined company the power to raise prices, slow innovation and hinder competitors.

Mr. Delrahim has said he wasn't influenced by the White House and politics played no role in his decision.

At last week's hearing the Justice Department said it had been willing to approve the merger if AT&T had agreed to change the structure of the deal by selling off certain assets. It argued the companies should be prohibited from making bias claims at trial, saying the companies' request for internal documents was an unjustified "fishing expedition."

The department has previously produced a log of certain communications between the White House and Justice Department's antitrust division, but said all those communications involved preparations for Mr. Delrahim's Senate confirmation hearing.

AT&T wanted Judge Leon to require the Justice Department to produce a log of additional communications, if any existed, about the White House's input on the transaction.

The company sought information on potential communications between the White House and the attorney general's office, as well as internal Justice Department communications citing the president's views.

In rejecting the request, Judge Leon's ruling Tuesday signaled a broader skepticism of AT&T's contention that the Justice Department's lawsuit was unprecedented in recent times.

"History belies the notion that this action is the first and only time that the government has found an antitrust problem with a proposed vertical merger or insisted on a structural remedy as a condition to settlement," the judge wrote. "So while it may, indeed, be a rare breed of horse, it is not exactly a unicorn!"

--Drew FitzGerald contributed to this article.

Write to Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

February 21, 2018 02:47 ET (07:47 GMT)

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