The preseason does not count: Why the FCC staff paper won’t impact the ATT/TMobile merger trial

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First, the FCC staff report will have minimal if any impact on the trial.  A trial is the examination of the facts in a setting in which testimony is public and goes through the crucible of cross examination.  Facts are admissible only so far as they accord with the standards of the Federal Rules of Evidence.  

Because both sides present and examine evidence, a judge can make a balanced determination.  We all recognize that essential to the judicial system are these guarantees of fairness.  

Certainly the FCC staff worked incredibly diligently to analyze the issues in their report and they should be commended for that effort.  But the FCC staff is simply a prosecutor, not a judge, not a jury.  ATT/TMobile never had the opportunity to challenge many of the facts.  Relying on this report simply would not lead to a just or necessarily accurate result.

Second, the FCC is acting under a different standard.  The FCC proceeds on a broad standard of whether a merger is in the public interest.  The standard the DOJ faces before Judge Huvelle is to demonstrate that a merger is likely to “substantially lessen competition.”  

Furthermore, the FCC has the luxury of placing the burden on the merging parties to convince the agency that the merger will be in the public interest. This standard allows the FCC to reject or dismiss the parties’ arguments with little consequence.  The DOJ, however, carries the burden of demonstrating that the transaction will substantially lessen competition – meaning that the burdens are switched. 

Third, a federal court judge is unlikely to be deferential to an administrative agency staff’s interpretation of the facts.  She is going to want to hear the testimony and examine the documents on her own, especially after they are tested by cross examination. Not surprisingly there never has been a merger case where a federal court judge relied on an agency staff report like this one.  The facts to a judge are the facts she hears, not the facts interpreted by bureaucrats.  

Reading the report, one can’t help but notice the report’s reliance on redacted documents.  It is impossible for the public at large, or a judge presiding at trial, to contextualize the validity of this report without the benefit of access to these documents and the process of trial to understand their significance. 

Given the massive quantity of documents reviewed by the FCC, it is not surprising that there are incongruous documents – only the procedure of trial can separate the fat from the milk, and determine the true story behind the merger, and the future of mobile wireless competition. 

Some people may praise the FCC for releasing the report.  They should be cautious of the precedent the FCC has established through this unprecedented action.  Imagine in some future case the DOJ goes to court to block a merger but the FCC does not agree with the DOJ and there is a staff report supporting the merger. Under this new precedent a defendant could convince a court to compel the FCC to release the report, significantly harming the DOJ’s case.  No one will cheer that result.

Some people may suggest the FCC staff report dooms the ATT/TMobile merger.  They would be wise to remember the unbridled enthusiasm of Philadelphia Eagles fans after starting with victories.  

It was only the preseason.  And in this case, the real season starts on February 13th before Judge Huvelle. 

Balto is a private antitrust attorney and former Policy Director at the FTC.

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