Department of Justice Antitrust Chief Makan Delrahim said that if the government does not find a way to harness the massive market power of those platforms to democratic policies, the country risks "devastating outcomes for our civil democratic society."

He suggested one solution could be a new "public-private" agency, the Digital Markets Rulemaking Board, with the power to regulate edge providers like social media sites.

Also Read: Delrahim Seeks Examples of Online Platform Anticompetitive Conduct

"The single greatest issues facing my successors, the new Congress, and the public relate to concerns of market integrity and market power in the increasingly concentrated digital marketplace," he said. "These issues include data portability, non-discrimination and interoperability of digital products and services."

Delrahim was delivering some sobering final thoughts about Big Tech in a speech to the Duke’s Center on Science & Technology Policy on his last day as, he pointed out, the Senate-confirmed assistant attorney general in the Antitrust Division.

He said that policy solutions in the current debate over the power of online platforms and digital markets have ranged from "command and control" regulations from a new agency charged with overseeing digital technology to breaking up companies with a certain size (like Google and Facebook and Twitter), to laissez-faire self regulation.

Delrahim instead suggested a hybrid public-private rulemaking body with "limited" oversight to increase both competition among and trust in online platforms.

He said that agency could come up with rules to prevent discrimination by larger platforms against products or services either because they compete with them or because they "espouse viewpoints inconsistent with those of the platform operators."

Also Read: DOJ OK With Online Ad Production Services Market

That new Digital Markets Rulemaking Board (DMRB) would be "a private/public self-regulatory board consisting of industry and public members with technical and policy expertise with the mission to develop and propose market-based, non-discriminatory rules to promote market integrity."

He said a public-private hybrid would help gain the trust of the public while letting government tap into the tech savvy of private industry. 

He said it would be the most appropriate regulatory model because it would have the flexibility to adapt to swiftly changing technology that a "rigid command-and-control" regime lacks. 

He also said the DMRB's rulemaking authority should cover things including "interoperability, self-preferencing, non-discrimination and data portability."

He said the resulting rules would need "limited" review and sign-off by DOJ or some other agency. 

Delrahim also had some legislative proposals on the merger front. 

Also Read: FTC, DOJ Big Tech Investigations Suffer Overlap Issues

He said that Congress should pass a new law that any further acquisitions in a market by a firm with more than 50% market share in that market be presumptively anticompetitive, rebuttable only by a showing that the merged company could not exercise market power or that the anticompetitive effects are outweighed by pro-competitive benefits.

One of Justice's concerns about Big Tech is that it got and stayed that way by buying up competitors before they raised red flags on antitrust grounds. He said the presumption should apply "regardless of the size of the target company," which would help address that concern.

The Department of Justice has created the a new office in the Antitrust division to oversee enforcement of consent decrees, like the one that allowed Sprint and T-Mobile to merge.

The Office of Decree Enforcement and Compliance will have the primary responsibility for enforcing consent decrees and judgments in civil matters and advise the criminal section when parties seek credit for corporate compliance programs. 

Related: DOJ Updates Vertical Merger Guidelines 

It will also be the point of contact for anyone with information on possible violations of final judgments. 

Antitrust Division chief Makan Delrahim is no big fan of conditioned mergers, arguing that those are efforts to make illegal mergers legal, with DOJ having to act as an ongoing monitor. 

“The Office of Decree Enforcement and Compliance will ensure the American consumer fully benefits from the Antitrust Division’s hard work identifying anticompetitive mergers and conduct,” said Delrahim. “We are building on our recent successes in Live Nation and CenturyLink. Those matters show how important it is to enforce our consent decrees vigilantly.” 

Last week, Justice and broadband/telecom company CenturyLink settled allegations that the company violated the conditions of its acquisition of Level 3. 

The Office of Decree Enforcement and Compliance will be headed Lawrence Reicher, most recently counsel to the assistant attorney general (Delrahim). 

Taylor Owings, counsel to Department of Justice Antitrust Division chief Makan Delrahim and a leading figure in the division's review of online platforms and antitrust, has been named acting chief of staff and, eventually, acting senior counsel for the division. 

Related: House Continues Deep Dive into Digital Antitrust and Big Tech 

Owings has been counsel to Delrahim since February 2018. Chief of staff William Rinner will serve as senior counsel until his departure "in the coming months." 

Related: DOJ Working with States on Edge Investigation 

Owings has been served on the leadership team for the ongoing review of whether Big Tech platforms bought their way up to monopoly and whether antitrust oversight needs to pivot to capture the speed at which Big Tech can capture market share. She received the Attorney General's Award for Distinguished Service in 2019. 

FCC Chairman Ajit Pai welcomed the news Wednesday that T-Mobile had completed its $1.4 billion spin-off of low-cost prepaid business, Boost Mobile, to Dish, as did DOJ antitrust chief Makan Delrahim. 

Related: Dish Closes Boost Mobile Deal

That was one of the T-Mobile-Sprint deal conditions imposed by both Justice and the FCC, one that was designed to help seed a potential facilities-based wireless service to compete with AT&T, Verizon and the new T-Mobile. 

For the near term, Dish will operate its wireless service over Sprint facilities, but the idea is for it ultimately to use its own spectrum. 

“Today, we are proud to welcome hundreds of employees, thousands of independent retailers, and millions of customers to the DISH family,” said Dish President Erik Carlson. “This marks an important milestone in DISH’s evolution as a connectivity company. It positions us well as we continue to build out the first virtualized, standalone 5G network in America.” 

“I’m pleased to see that T-Mobile has met one of its most important merger commitments,” said Pai. “Today’s action is a key step towards promoting vigorous competition in the wireless marketplace, particularly for price-conscious consumers in our nation’s cities. I also welcome DISH’s entry into the mobile industry. With this divestiture and its existing spectrum resources, DISH has the potential to make a big impact on a wireless marketplace that is transitioning to 5G, the next generation of wireless connectivity." 

“I congratulate T-Mobile and Dish for closing the Boost divestiture as required under the Final Judgment,” said Assistant Attorney General Makan Delrahim, who heads the Department of Justice's Antitrust Division. “This deal is a significant milestone in realizing the Department of Justice’s remedy, which is designed to strengthen competition for high-quality 5G networks and benefit American consumers nationwide.”

The Trump Administration has released its new internal guidelines for how the relevant agencies will review vertical mergers, with an eye toward better identifying and challenging competitively harmful mergers, though critics of the process say the guidelines still keep a thumb on scale for such mergers. 

Vertical mergers are ones that combine different parts of the same supply chain, an AT&T with its video services and Time Warner with its content production, for example, which DOJ tried unsuccessfully to block.

The Justice Department and Federal Trade Commission divvy up merger antitrust reviews, with Justice usually getting the media mergers. This is the first time they have issued joint guidelines and the first major revision since 1984. 

The two have been working on a draft of new rules for some time, including putting them out for public comment. The FTC vote to release the new guidelines was 3-2 along party lines, with Democratic commissioners Rohit Chopra and Rebecca Kelly Slaughter voting no. 

Related: DOJ, FTC Schedule Vertical Merger Workshops

Historically, vertical mergers have not frequently been challenged, but Department of Justice antitrust chief Makan Delrahim has made it clear there remain antitrust issues with vertical mergers, as was evidence by Justice's attempt to block the AT&T-Time Warner deal.  

“These new Vertical Merger Guidelines provide transparency in the important area of vertical merger analysis,” said Delrahim.

FTC chairman Joe Simons called them "an important step forward in maintaining vigorous antitrust enforcement," and said they "reaffirm our commitment to challenge vertical mergers that are anticompetitive and would harm American consumers." But he also said they essentially reflect current enforcement policy, and in that sense are a transparency move to give businesses a heads up. 

In her dissent, commissioner Slaughter said one reason she voted "no" was that the guidelines refused to explicitly disavow the "false assertion" that vertical mergers are almost always pro-competitive. 

She did say there were positive changes including eliminating the "quasi-safe" harbor based on market share. The draft guidelines had signaled that a vertical merger is unlikely to be challenged if the merged parties have less than a 20% share of the market, as well as its discussion of raising rival's distribution costs as a potential competitive harm, which was a key point in DOJ's attempt to block AT&T-Time Warner, as well as its discussion of the purchase of firms that are the most likely potential competitors. That has been a key DOJ concern with Big Tech firms and whether they had bought themselves up to monopoly by purchasing potential rivals early, before it raises antitrust review. More than one venture capital-backed tech startup has launched in hopes of getting bought out for big bucks. 

Where the guidelines fell short, she said, were "(1) the over-emphasis of the benefits of vertical mergers; (2) failure to identify merger characteristics that are most likely to be problematic; (3) the treatment of the elimination of double marginalization (“EDM”); and (4) the omission of important competition concerns including buy-side power, regulatory evasion, and remedies." 

Related: DOJ, FTC Spar Over Roles in Antitrust Reviews

Delrahim signaled this week that the revision is basically updating the guidelines to square with its investigative practices and approach over the past few years, as a way to provide "greater predictability." 

Joshua Stager, senior counsel for New America’s Open Technology Institute, agreed with Slaughter that the guidelines were underwhelming, calling it a missed opportunity for real change. OTI opposed the Comcast/NBCU, AT&T/DirecTV and AT&T/Time Warner deals, all of which passed muster, either with the relevant administration or the courts. 

“These guidelines haven't changed since 1984, during which time competition has waned and inequality has worsened," Stager said. "We hoped the FTC and DOJ would use this process to make our antitrust laws work better for the American people. Unfortunately, the new guidelines miss the mark. Rather than refresh outdated thinking, the new guidelines gloss over critical issues and ignore the risks of vertical mergers, particularly in digital markets."

The Trump Administration won't challenge a proposal to create an online market where advertisers can get bids for advertising production services.

The Association of Independent Commercial Producers submitted a proposal to create an online platform where those advertisers can solicit bids from production services companies. In a response, DOJ told the counsel for AICP that while exchanging price and other competitive info can make it easier for competitors to coordinate activity anticompetitively, AICP has designed the platform to prevent that kind of info sharing.

Those include safeguards against information being shared among advertisers and firewalls against AICP accessing the third-party info.

Based on those safeguards and firewalls protecting third-party information, Antitrust Division Chief Makan Delrahim told AICP Justice has no intention of challenging the bidding platform.

Attention parties with merger regulatory reviews pending or proposed. There are some coronavirus-related changes to the process, said the Department of Justice. 

That is a response to the mass telework directive to government agencies. 

“As the Antitrust Division takes steps to protect the health and safety of its work force and the parties that appear before it, these process changes will ensure that the Division can continue to review transactions efficiently and effectively,” said Assistant Attorney General Makan Delrahim in a statement. 

He said the antitrust division remains "open for business," he said, and ready to work with the business community on vetting mergers. 

The chief changes are: 

1. "For mergers currently pending or that may be proposed, the Antitrust Division is requesting from merging parties an additional 30 days to timing agreements to complete its review of transactions after the parties have complied with document requests. 

2. "If circumstances require, the Division may revisit its timing agreements with merging parties in light of further developments. 

3. "The Antitrust Division will allow electronic filing of Hart-Scott-Rodino submissions. 

4. "The Antitrust Division will conduct all meetings by phone or video conference (where possible), absent extenuating circumstances. 

5. "All scheduled depositions temporarily will be postponed and will be rescheduled using secure videoconferencing capabilities." 

Department of Justice antitrust chief Makan Delrahim is looking for real-world examples of anticompetitive behavior as part of the department's ongoing inquiry into "the competitive conditions under which online platforms operate." 

Delrahim and Justice have been looking into how Big Tech got that way, and whether any anticompetitive red flags were missed in the series of mergers, often with smaller start-ups fueled by venture capital, that allowed edge providers to become mammoth players in the U.S. and world economy. 

Related: FTC, DOJ Big Tech Investigations Suffer Overlap Issues 

As part of a workshop at Stanford University Wednesday (Feb. 21) on venture capital and antitrust, Delrahim gave out an email address (ATR.VCworkshop@usdoj.gov) that his audience could use to email their questions or reactions to the discussion in real time, or perhaps something more.  

"We hope that today’s discussion will be so dynamic that you will want to get involved by emailing your thoughts," he said, "or maybe even your concerns about anticompetitive conduct you have witnessed, to our DOJ email account." He promised them anonymity and/or confidentiality. 

Delrahim talked at the workshop about how both venture capitalists and antitrust regulators have to look at a market and make educated predictions about what might happen to businesses in the future.  

"In painting a picture of monopoly power, antitrust enforcers predict how diminished competition will result in the monopolist raising prices, or reducing quality. Of course, a common argument by defendants in antitrust cases is that the future of the market will not allow them to exercise that monopoly power," Delrahim told the audience. "Instead, they argue that disruptive innovation is just around the corner.  

Related: FTC Launches Inquiry Into Big Tech Deals

"To address these arguments, antitrust enforcers often have to think hard about where innovation will really come from, or whether it will come at all. That means thinking a bit like a venture capitalist to assess whether a new platform or startup will actually be able to challenge those in power today." 

Delrahim signaled what he hoped to get out of the workshop: 1) What does the VC think is the likelihood that some future disruptive innovation will challenge the current tech giants; 2) "Are any of today’s digital platforms so dominant, with such a capability to restrict access to inputs or to distribution of products, that investors are not willing to develop products that rely on those platforms"; 3) "Where are we in the life cycle of the market for data about how people interact with websites, and with their phones or wearables?"; and 4) what tools does the VC community use to evaluate transactions that Justice could use to determine whether a merger stems from the desire to create value for consumers or to prevent competition. 

He said of number three above that it was part of a larger national debate about data privacy and he asked if his audience had a sense of the value of data in different markets and how consumers may be served by rules that allow collection and use of data.  

That data is currently the currency that pays for the free internet content model the nation and the world have come to expect, but its sharing with third parties and more than occasional insecurity have raised questions about whether the price in lost privacy for that content is too high.  

The prospect that "third parties [could] undercut...federal enforcement decisions" - such as the pending T-Mobile/Sprint merger - is one of the greatest concerns in the new antitrust environment, Assistant Attorney General Makan Delrahim explained in remarks to the monthly luncheon of the Media Institute in Washington on Wednesday (Feb. 5). He reminded the policy-centric audience that the Federal Communications Commission, the Department of Justice and many states approved the merger last year. But then attorneys general from 10 states and the District of Columbia sued to prevent the alliance; a decision is still pending.

"So, we have two specialized federal agencies reviewing the T-Mobile/Sprint transaction" and deeming it legal, Delrahim said. "Yet, we have a minority of states and the District of Columbia trying to undo that relief across the entire country. If you find this situation odd, you’re not alone."

"We often work closely with our state attorneys general partners in enforcement actions," he continued. "Here, however, a small group of state attorneys general did not reach consensus." Delrahim contended that such actions are "incompatible with the orderly operation of our antitrust merger laws and telecommunications regulations. It creates the risk that a small subset of states, or even perhaps just one, could undermine beneficial transactions and settlements nationwide."

Delrahim fretted, "That any state, or even any individual, can undo the nationwide relief secured by the federal government and approved by a federal court."

"That would wreak havoc on parties’ ability to merge, on the government’s ability to settle cases, and cause real uncertainty in the market for mergers and acquisitions," he added, noting that "Permitting states to undermine federal enforcement also would be contrary to congressional intent."

The AAG's passionate example emphasized the core of his remarks, which focused on DoJ's efforts to "reform" and "modernize" the Antitrust Division's merger review process.

"As a benchmark to measure success, we committed that we would aim to resolve most merger investigations within six months of filing," Delrahim said. After about 18 months of efforts, he said current initial merger reviews take about 5.4 months, and for cases that involve any challenge "the average time to notification is 5.7 months."

Steering Clear of Tech Examination and Media Issues

Delrahim ducked questions about DoJ's broad antitrust investigation of major digital platform firms (Google, Amazon, Apple and Facebook), announced in July. Initially, the agency expected to complete that probe by the end of 2019.

Early this week, Delrahim was recused from the Google portion that probe because of a potential conflict of interest. Before joining DoJ, Delrahim in private practice represented Google in its 2007 acquisition of DoubleClick, an ad-tech firm.

Separately, Delrahim touched briefly on the long-pending examination of the 1941 consent decrees affecting BMI and ASCAP music licensing agreements. Last year, he said that DoJ expected to decide by the end of 2019 whether those restrictions should be amended, eliminated or maintained as is.

On Wednesday he would only say that the agency's review is not comparable to its November 2019 termination of the half-century-old Paramount consent decree affecting studio ownership of exhibition facilities.

The Trump Administration is seeking comment on proposed new guidelines for vetting the competitive effects of vertical mergers--say, between a content producer and distributor. 

Comments must be in by Feb. 11.

The guidelines reject the notion, according to one of the FTC commissioners who voted on them, "that vertical mergers are rarely anticompetitive and nearly always procompetitive."

Vertical mergers are ones that "combine firms or assets that operate at different stages of the same supply chain," like a product producer and distributor, whether that  product is widgets or video.

The guidelines were produced by the Department of Justice and Federal Trade Commission, which together divvy up reviews of mergers for potential anticompetitive effects, both unilateral and coordinated, like foreclosing rivals and raising their costs and access to sensitive info. 

Related: Delrahim Promotes AT&T-Time Warner Doctrine 

Stakeholders, including the public, will have 30 days to comment on the guidelines. 

“While many vertical mergers are competitively beneficial or neutral, both the Department and the Federal Trade Commission have recognized for over 25 years that some vertical transactions can raise serious concern,” said Assistant Attorney General Makan Delrahim, who heads Justice's antitrust division. “The revised draft guidelines are based on new economic understandings and the agencies’ experience over the past several decades and better reflect the agencies’ actual practice in evaluating proposed vertical mergers. Once finalized, the Vertical Merger Guidelines will provide more clarity and transparency on how we review vertical transactions. I look forward to receiving comments on these draft guidelines and working with the Federal Trade Commission in finalizing them.” 

He said the approach to vertical mergers has changed "substantially" since they were issued in 1984. 

How a court viewed the potential harms of a vertical merger in upholding the AT&T-Time Warner merger was a big issue in that court case, which Delrahim and Justice had challenged as anticompetitive, which had been characterized as the first such challenge to a vertical merger in 40 years, though Delrahim disputed that.  

Delrahim said while there was agreement that vertical mergers generally don't have the same issues as horizontal, that didn't mean they were per se legal.  

“Challenging anticompetitive vertical mergers is essential to vigorous enforcement," asid FTC Chairman Joseph Simons. "The agencies’ vertical merger policy has evolved substantially since the issuance of the 1984 Non-Horizontal Merger Guidelines, and our guidelines should reflect the current enforcement approach. Greater transparency about the complex issues surrounding vertical mergers will benefit the business community, practitioners, and the courts. We invite comments from all stakeholders to help ensure that the guidelines clearly and accurately convey the agencies’ antitrust enforcement policy with respect to vertical mergers.”

The FTC pointed out that many of the comments it received from the its hearings on "Competition and Consumer Protection in the 21st Century" "called for additional and updated guidance on analysis of vertical mergers," as had reports from the American Bar Association and the Antitrust Modernization Commission.

The new guidelines signal that a vertical merger is unlikely to be challenged if the merged parties have less than a 20% share of the market.

Democratic Commissioner Rebecca Kelly Slaughter, who joined with fellow Democrat Rohit Chopra to abastain from the decision--the vote on the proposed new guidelines was 3-0-2--said that "safe harbor" was one of the reasons she could not vote for the item. "My apprehensions about this language are threefold: setting a safe harbor generally, the choice of 20 percent market share for the safe harbor, and the lack of a corresponding presumption of harm, or at a minimum close scrutiny, for mergers involving highly concentrated markets," she said. 

Others were "the departure from Section 7 of the Clayton Act’s mandate to stop anticompetitive mergers in their incipiency," and that "certain issues lack sufficient emphasis."

But she did praise the guidelines rejection of a "verticals are generally fine" approach.

Chopra agrees the old guidelines need an overhaul and that the market does indeed look substantially different. But like Slaughter he said he could not vote for this remake. " I disagree with proposing the draft guidelines published today because they are not comprehensive or reflective of modern economic realities."

"The Draft Vertical Merger Guidelines add clarity by defining what it means for products to be related vertically and how the agencies will evaluate the competitive significance of that relationship," said Ted Bolema, a member of the Free State Foundation's board of academic advisors and a former trial attorney in DOJ's antitrust division. "This approach also allows the agencies to identify ‘safe harbors’ that, while not binding on the agencies, still provide companies considering vertical mergers to better recognize when antitrust pushback is more likely.” 

“Less helpful is the rather negative way the Draft Vertical Merger Guidelines describe how the agencies will review the efficiency benefits of vertical mergers. The Draft Guidelines recognize almost grudgingly that eliminating ‘double marginalization,’ or having only one company profiting from marking up prices instead of two, often benefits both the merging companies and their customers, and only briefly acknowledged that other efficiencies are possible. AT&T’s demonstration of efficiency benefits helped it defeat DOJ’s challenge to its Time Warner acquisition, and the Draft Guidelines indicate the agencies remain overly skeptical in how they evaluate efficiency benefits.”

In a move that should please patent-holder Qualcomm, but not iPhone maker Apple, the Justice Department has issued a new advisory on standards-essential patents that makes clear that the requirement to patent those technologies on reasonable terms does not mean that patent holders lose legal rights to protect them.

Standard-essential patents are ones for technologies that are essential for the functioning of a baseline technology, like Qualcomm chips in smart phones.

Related: Apple, App Developers: SEP Injunctions Should Not Be Easy

“Today’s policy statement recognizes that when licensing negotiations fail, appropriate remedies for patent infringement, including injunctive relief, should be available to SEP holders," said antitrust chief Makan Delrahim. "The availability of the full range of remedies is necessary in order to preserve competition and incentives for innovation, and for continued participation in standards-setting activities, which can produce substantial benefits for American consumers.”

So, when a patent owner promises to make the patent available to competitors at reasonable rates and on reasonable terms, it still has the full legal arsenal if it thinks its patents are being misused, i.e. that there is no special set of rules. Justice said the 2013 joint statement had appeared to suggest that special, unprotected, status when it said that seeking an injunction against use of those essential patents as part of a legal challenge could potentially harm competition.

"We hope that the new policy statement helps create greater efficiency in SEP licensing by achieving a healthier balance in leverage between patent-holders and licensees," said a Justice official speaking not for attribution. "That will ultimately reduce transaction costs and fuel the speedy incorporation of cutting-edge technologies into a broader range of products. Doing so will help foster dynamic competition that benefits the American consumer."

On whether the shift now favors patent holders--like Qualcomm--they said no, arguing that courts have consistently said patent holders have the right to seek injunctive relief. He said that the new policy statement just recognizes that SEPs have that right and that exercising it "does not raise competition concerns and is not in tension with the antitrust laws."

Antitrust Chief Makan Delrahim said in a speech last year that DOJ was rethinking its position on standards-essential patents (SEPs), including withdrawing from the Obama-era (2013) joint “Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary FRAND [fair, reasonable and nondiscriminatory] Commitments.”

Delrahim suggested that the 2013 statement had conveyed the wrong impression of DOJ's position on when and how patent holders can exclude competitors from using their essential technologies. "Since injunctions against infringement frequently do serve the public interest in maintaining a patent system that incentivizes and rewards successful inventors through the process of dynamic competition, enforcement agencies without clear direction otherwise from Congress should not place a thumb on the scale against an injunction in the case of FRAND-encumbered patents," Delrahim said at the time, presaging this week's statement.

Apple earlier this month had asked the Trump Administration not to withdraw from the statement, arguing that it "fully allows for appropriate monetary remedies if patent infringement is proven, while also recognizing appropriate limits for exclusionary relief when the SEP owner has instead promised to grant fair, reasonable, and nondiscriminatory (FRAND) licenses."

The Department of Justice is ending a two-year investigation into the standard-setting process for mobile device eSIMS, imbedable SIM cards that can be reprogrammed remotely and that its backers say are a key to the growth of the internet of things (IoT). 

The mobile industry is moving away from those tiny plastic removeable sim cards to move between networks. 

DOJ signaled its decision in a letter to GSM Association, the global mobile operator trade association whose members include a laundry list of tech companies here and abroad. 

DOJ said it would not be taking any enforcement action against GSMA after the association agreed to change the standards-setting process so that it will include more imput from non-operator members and produce standards that supercede their problematic predecessor. 

DOJ launched the investigation out of concern, which bore out, that GSMA "used its industry influence to steer the design of eSIMs technology in mobile devices," concerns it said appeared to be allayed by GSMA's changes.  

"The new standard-setting process will have a greater likelihood of creating procompetitive benefits for consumers of mobile devices; it will also curb the ability of mobile network operators to use the GSMA standard as a way to avoid new forms of disruptive competition that the embedded SIMs (eSIMs) technology may unleash," said Justice. "In light of these planned changes, the Antitrust Division has no present intention to bring an enforcement action against the GSMA or its mobile network operator members." 

Antitrust chief Makan Delrahim said he was looking for GSMA to deliver on a more "consumer friendly" eSIM standard. “The GSMA’s old procedures resulted in certain eSIMs rules that benefited only its incumbent mobile network operators at the risk of innovation and American consumers," he said. "The new procedures proposed going forward significantly reduce that risk and should result in new innovative offerings for consumers.”  

But GSMA is not out of the woods entirely. 

DOJ was responding to a GSMA proffering of the new standards process. Justice said it would not challenge it, but said it remains to be seen if the standard does insure meaningful participation by nonoperators and added that it still has issues with standards set within a trade association controlled by a "single constituency of competitors"--operators. 

As a result, Justice said it would be monitoring the standard "closely." 

GSMA was interpreting the Justice letter as vindication and victory. 

“The Justice Department reviewed millions of documents covering a multi-year and complex process to establish common standards for eSIM technologies," said GSMA. "Its Business Review Letter is conclusive that the agency found no violation of antitrust laws. eSIM is a global specification by the GSMA which enables remote SIM provisioning of any mobile device. Its universal approach will grow the Internet of Things by allowing manufacturers to build a new range of products for global deployment based on a common embedded SIM architecture. With eSIM it will become easier to extend mobile connectivity to devices such as tablets, smart watches, fitness bands, portable health systems and various other devices." 

Signs are good that the Justice Department will be announcing its decision on the T-Mobile-Sprint merger Friday morning. 

Late Thursday night, DOJ said the antitrust chief Makan Delrahim will be holding a "pen and paper" briefing at 11 a.m. Friday (July 26) to announce "a significant merger enforcement action." 

DOJ did not say which merger it was, but it is likely to be that one. 

FCC chairman Ajit Pai has already signaled he supports the deal on condition that T-Mobile spins off its Boost Mobile prepaid business and some spectrum, which DISH is expected to buy. 

Pai has called the deal "a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”  

His fellow Republicans have signaled they are okay with it, too, so it should have the votes to pass. 

 T-Mobile has been saying that without the deal the company would not be able to build out that national 5G network as quickly.  

Pai also said that the combined company has "offered specific commitments regarding the rollout of an in-home broadband product, including to rural households."  

According to FCC officials speaking on background, the companies have promised to structure the Boost divestiture so that Boost has the incentive and ability to compete with T-Mobile-Sprint in the low-cost market, and vice versa, notwithstanding the wholesale agreement between the new company and Boost.

Journalists covering the media beat are hoping the U.S. Court of Appeals for the D.C. Circuit does not choose about the same time to announce its decision on the challenge to the FCC's network neutrality rules.

The court generally releases its decisions Tuesdays and Fridays between 10 and 11 a.m. 

The G7 countries have agreed that competition regulators--like the Justice Department, Federal Trade Commission and FCC--need the right tools and insights if they are going to enforce competition policy in the digital age.

That is part of a draft Common Understanding of G7 Competition Authorities on Competition and the Digital Economy released Thursday (July 18) to inform discussions among G7 ministers and Central Bank governors in Chantilly, France, this week.

Antitrust Chief Makan Delrahim, who has been publicly pondering the antitrust issues surrounding the rise of Big Tech, participated in drafting the memorandum at a June 5 meeting with other G& representatives.

Related: Senate Dems Want Confirmation of Big Tech Investigations

According to Justice, the Common Understanding "says that “[f]or effective enforcement and policy engagement, it is important that competition authorities have the tools and means to deepen their knowledge of new business models and their impact on competition, for example, through market studies or sector inquiries and by adding in-house capabilities to keep current with issues raised by the digital economy.”

FTC Chairman Joe Simons, for one, has been pitching Congress on giving the FCC more tools and talent to deal with he issues around Big Tech.

“Digital technologies improve our lives in a myriad of ways, but also present challenges for competition authorities,” said Delrahim. “I welcome the opportunity to work closely with our G7 counterparts and other competition agencies to address the important issues arising from the digital economy.”

The G7 comprises Canada, France, Germany, Italy, Japan, the UK and the U.S. They meet periodically and informaly to talk global economic policy.

Federal Trade Commission Chairman Joseph Simons has assured Congress that its review of how the antitrust laws should apply to high-tech conduct is not a one-off task force, but a new litigation division ready to pursue anticompetitive conduct by the edge, including getting at digital platforms through their impact on privacy.

He made it clear that antitrust issues are raised not only by pricing but by reductions in product quality, which could include privacy, he said.

That came at a budget hearing in the Senate Appropriations Financial Services and General Government Subcommittee May 7 and after questions have been raised about the possible need for a new antitrust approach to social media, whose cost to the consumer may seem to be zero, but is in fact in data privacy and control.

Related: Delrahim Says FAANG Monopoly May Not Necessarily Be Bad

Subcommittee chairman Sen. John Kennedy (R-La.) pointed out that there has been some debate over whether edge providers have avoided antitrust scrutiny over their conduct and growth through acquisitions because as a free service there are not issues with pricing and that perhaps the FTC has not been sufficiently attuned to other consumer harms other than raising prices.

Simons said the FTC's new high-tech antitrust task force, which is part of the bureau of competition, is not temporary, but is basically another litigation division in that bureau. He said its mission was to focus on high tech, particularly digital platforms, looking at both transactions and conduct.

Related: Sen. Klobuchar Looks to Tighten Clayton Act Triggers

He said he expected the division would be bringing cases, which would just continue if and when it found more such cases.

Kennedy wanted to know when such cases against digital platforms might be coming, but then adjusted the question to when Congress would know what the FTC's policy toward edge providers and antitrust would be.

Simons said antitrust policy was irrespective of the task force, which is to "stop anticompetitive conduct and anticompetive mergers that either result in price increases, reductions in product quality, which would include privacy, and reductions in innovation. 

Veteran consolidation critic Anna Eshoo (D-Calif.) has joined with Republican Billy Long (R-Mo.) and almost a dozen other House members in support of the merger of T-Mobile and Sprint.

In a letter to FCC chair Ajit Pai and Department of Justice antitrust chief Makan Delrahim, they echoed the two companies talking points on why the deal is pro-competitive, pro-jobs and pro-5G, saying that they believed the merger would "transform the wireless industry, drive innovation, help close the digital divide, and provide consumers with more choices at lower costs."

At a House Communications Subcommittee hearing on the deal Wednesday (Feb. 13), Eshoo asked no questions, instead using her time to make those points, essentially signaling she agreed with T-Mobile CEO John Legere that what the deal would do was provide a stronger competitor to the duopoly of AT&T and Verizon, which together have the majority of wireless subs.

Eshoo, Long and others also point to the combination of spectrum assets of the two companies to deliver a more robust 5G network than either could do alone, another major argument offered up by both companies.

Most Democrats at the hearing expressed concerns that the merger would reduce the major competitors in the space from four to three. pointing to calculations that the deal would exceed guidelines for market concentration that triggers red flags.

Republicans countered that the marketplace had changed and that the government needed to take a holistic view rather than simply intervene to keep four carriers by imposing artificial market constraints.

The Trump Administration is switching gears on patent protections for proprietary technologies that are part of a technical standard, say a chipset integral to smart phone operation, for example, or at least clarifying what gear it thinks the government should always have been in.

That came in speech Friday (Dec. 7) by Department of Justice Antitrust chief Makan Delrahim.

Delrahim, speaking at the 19th Annual Berkeley-Stanford Advanced Patent Law Institute, said: "[S]tandard-setting organizations have been given too little scrutiny when they have acted as a forum to slow down, rather than to facilitate, the adoption of disruptive innovations" and that the government has been sending the wrong signal if folks think different rules necessarily apply to standards-essential patents when it comes to redress of grievances.

Delrahim has been critical of the argument that holders of standards-essential patents (SEPs) can exclude competitors from using the technology, "including seeking injunctions against the sale of infringing goods." He called the argument bad law and bad innovation policy. 

He said some of the confusion stems from the contractual agreement SEP holders strike when their tech is made part of a standard, or the so called F/RAND commitments, and a misimpression left by the Obama antitrust division in a 2013 joint statement with the USPTO entitled “Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments.” 

That statement advised that "In some circumstances, the remedy of an injunction or exclusion order" when an SEP is subject to an F/RAND agreement "may be inconsistent with the public interest."

Statement also points out that "when a standard incorporates patented technology owned by a participant in the standards-setting process, and the standard becomes established, it may be prohibitively difficult and expensive to switch to a different technology within the established standard or to a different standard entirely. As a result, the owner of that patented technology may gain market power and potentially take advantage of it by engaging in patent hold-up."

"As I have said before, this joint statement should not be read as a limitation on the careful balance that patent law strikes to optimize the incentive to innovate," Delrahim said, but he was clearly tired of having to clarify. 

He said the potential for confusion "remains high," so he is taking steps to clear it up. "The Antitrust Division is hereby withdrawing its assent to the 2013 joint “Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments," he said. 

"The 2013 statement has not accurately conveyed our position about when and how patent holders should be able to exclude competitors from practicing their technologies. We will be engaging with the U.S.P.T.O. to draft a new joint statement that better provides clarity and predictability with respect to the balance of interests at stake when an SEP-holder seeks an injunctive order," he added. 

Not only should SEP patent holders be able to hold up their patents to protect them, they should also be able to "hold out" if those innovators have already sunk their investments into developing a valuable technology.

Standard-setting bodies are also on notice that Delrahim's division is casting a critical eye on their ability to collude, say, when a group of product manufacturers in a standards-setting body get together to dictate licensing terms as a condition for including a patent in a standard.

"The Antitrust Division will therefore investigate and bring enforcement actions to end practices that eliminate the independent centers of decision-making and thereby harm competitive processes, including price competition and innovation competition," he said.

The American Cable Association has called on the Justice Department to open an antitrust investigation into Comcast-NBCUniversal. It would be a way to keep Justice overseeing the company after the conditions it imposed on the merger expired earlier this year. ACA is saying the government still needs a leash on the company, rather than unleash. The ACA said the problems Justice saw in 2011 when it imposed the conditions are still problems.

Comcast-NBCU said the ACA's call is meritless and "constitutes an inappropriate attempt to gain leverage in the commercial marketplace."

But President Donald Trump, who is no fan of NBC News or most big media companies with news operations that have reported critically on him, took note of the ACA letter in a tweet:

[embed]https://twitter.com/realDonaldTrump/status/1062045654711713792[/embed]

ACA was not complaining about the additional spotlight, thanking the President for his input. A spokesman for the group said they did not know how the President became aware of the letter, though his Tweet came after it was reported by Multichannel News and others.

ACA wanted Justice to extend the conditions, but that didn't happen, though antitrust chief Makan Delrahim has signaled that one of the reasons he favors spin-offs over behavioral conditions like those put on the merger is that it is hard to enforce them. He also said Justice would keep an eye on the company now that the conditions have sunset. But ACA suggests it needs to do more than monitor to keep the company in line, plus monitoring alone may not be enough to protect the rivals who have information about the company's business practices that they want to share.

ACA also asked the FCC to toughen its program access rules given that the conditions were going away, but the FCC has not done so.

Related: ACA Says Deal Conditions Should Last Longer

ACA has long complained that large program suppliers force bundled carriage and impose unfair terms due to their size and market power on the smaller entities it represents.

"By opening a formal investigation, the DOJ will demonstrate seriousness of purpose and give it the ability to collect sufficient information to determine whether Comcast-NBC is acting anticompetitively," ACA said.

ACA's letter seeking the investigation was addressed to Delrahim and offered ACA's cooperation, including providing some info on Comcast-NBCU's business practices. ACA has long said the merged company has the incentive and opportunity, and willingness, to inflict anticompetitive harms given its size relative to the smaller cable and broadband operators ACA represents.

"NBCU has shown a willingness to harm rivals, even while being subject to the 2011 DOJ and FCC conditions," said ACA President Matt Polka. "In light of these concerns, which also have been expressed by members of Congress and a diverse array of stakeholders, the Antitrust Division should immediately open an investigation into the firm’s behavior."

"In 2011, the DOJ and FCC recognized that the combination of programming and distribution assets within Comcast-NBCU created such serious competitive problems that the transaction could only be approved with robust remedies. Since that time, as demonstrated herein, Comcast-NBCU’s dominant position in the market has not lessened, and in fact, it is even greater-and the 2011 remedies are no longer in effect. As a result, Comcast-NBCU is unleashed, and consumer and rivals are bound to suffer harm."

"The video programming and distribution markets are incredibly competitive," Comcast countered in a statement. "New programmers and distribution platforms are offering consumers increasing choices on what and where to watch. At Comcast NBCUniversal, we are competing in this dynamic environment the way we always have – by continuing to innovate and conducting our business in compliance with antitrust laws and other legal requirements. Among other things, Comcast Cable has brought Netflix and YouTube to our X1 platform. And NBCUniversal has provided content to Hulu, Netflix, and hundreds of other traditional and over-the-top providers."

One of Delrahim's big issues with the AT&T-Time Warner deal, which Justice sued to block because AT&T would not agree to spin-offs rather than behavioral conditions, is that he saw it as incentive and opportunity for that merged company to disadvantage over-the-top rivals by limiting their access to either the company's programming or distribution network.

Suggesting digital dominance could be here today and gone tomorrow, Justice Department antitrust chief Makan Delrahim has signaled that edge provider giant's market shares and profits don't necessarily raise antitrust red flags.

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

One of the challenges of such enforcement, he said was assessing market power, signaling that today's Facebook could be tomorrow's MySpace.

He said that given the fact that market power is a motivator for investment in a free market, the government must be careful about ascribing market power in markets subject to rapid change.

He said that assessment can be "tricky" in a digital economy.

"Market leaders are often displaced overall and within categories," he said. "The existence of multi-sided platforms further complicates the analysis, especially where platforms provide services for free to one set of users subsidized through sales to another set of consumers.

Traditional market share calculation may not be as helpful in such cases," adding: "A high market share does not always equate to market power.

Depending on the circumstances, a firm with a high market share still may lack the ability to increase price or exclude competitors."
He said market share and high profit margins may be the advantage of a first mover, which uses those profits to "recoup investment in sunk costs

and provide incentives to take on the risks inherent in innovation." He also said high prices can "serve as an engine of innovation, inviting entry and even disruption by new competitors," he argues. That could mean "it may be entirely possible for popular companies with large market shares to be replaced quickly by new, innovative competitors. Firms that fail to innovate are often left behind in the dust."

He even suggested that first to dust scenario could be the case for the current edge giants.

"This is true in both the United States and Mexico. For instance, a study looked at the top 20 most popular websites in Mexico between 2006 and 2013. Facebook jumped from #14 in popularity in 2006 to #1 by 2013, while competitors MySpace and Hi5 dropped from #7 and #13, respectively, to off the chart entirely. Twitter was not on the list at all in 2006, but was #7 by 2013. Who knows what a comparable list will look like in 2025?"

He said the question for antitrust enforcers is whether that market power has staying power, or whether it may not translate to "a supracompetitive price or exclude competitors."

In any event, market power alone is not an antitrust violation, he said. Only if "a firm uses market power to harm or exclude competition" is "timely and vigorous enforcement necessary."

WASHINGTON — The Supreme Court decision on credit card fees notwithstanding, tech giants such as Google and Facebook could face antitrust scrutiny from the Justice Department if they are deemed too anti-competitively big or powerful when viewed through a lens of consumer welfare.

Related:  Supremes Decision Could Give Tech a New Edge

In a speech at a Federalist Society conference, antitrust division chief Makan Delrahim said at the core of antitrust law is that “enforcers [such as Justice] and courts continue to rely on the latest economic tools in order to improve their understanding of what may, or may not, constitute harm to competition and, ultimately, to consumers.”

He pointed to the Microsoft case of two decades ago.

“You may recall that around that time, many had argued that antitrust had no role in the dynamic software industry, and that Microsoft could not possibly violate the antitrust laws as a matter of conservative ideology,” he said.

Microsoft had argued that bundling its Explorer web browser and Windows operating system was an innovative new product. Judge Thomas Penfield Jackson saw it as a monopoly, and Delrahim agreed.

He said that not only was the case decided correctly, but that it was a testament to the idea that “the consumer welfare standard remains the goal, while our economic tools and their applications to new business models and digital markets continue to evolve.” Delrahim credited that approach to Judge Robert Bork as outlined in his 1978 book, The Antitrust Paradox, the 40th anniversary of which the Federalist Society was celebrating.

The nation’s top antitrust enforcer, Makan Delrahim, who is currently taking on AT&T in a Washington, D.C., federal court to block its merger with Time Warner, will also be defending AT&T’s business interests in another D.C. federal court.

In a speech at Vanderbilt University, the head of the Justice Department’s antitrust division pointed out that his department would be defending the Federal Communications Commission in the legal challenges to its network neutrality regulations rollback, which AT&T backed and is defending in court as a member of USTelecom. That will put Delrahim and the telco on the same legal side.

Delrahim pointed out that the economic regulations, like the FCC’s network neutrality issue, fall under his division’s purview. “When the U.S. government defends [such regulations],” he said, “it’s the antitrust division that gets involved with defending their rules.” While the net neutrality case was going to be argued in the 9th U.S. Circuit Court of Appeals in California, it has been moved to the D.C. Circuit, which has heard previous appeals of the FCC’s rules.

Delrahim did not comment on Justice’s lawsuit against the AT&T-Time Warner merger, which began in Washington two weeks ago.

But he did talk about the importance of the court’s decision and its potential impact on the future direction of business and vertical integration.

Delrahim has signaled that he thinks that rather than apply conditions under consent decrees, Justice should apply structural remedies, such as spinoffs, then let the market determine what happens next, instead of having the government enforcing measures to make an illegal deal legal.

WASHINGTON — The Justice Department’s new antitrust chief, Makan Delrahim, may not have talked specifics during a speech discussing his theory of antitrust merger reviews, but he sent clear signals that divestitures are a cleaner, more deregulatory fix for problematic deals. That ultimately could translate into a trip to court by AT&T.

Delrahim did not talk about the AT&T-Time Warner deal in a speech he gave to the American Bar Association in Washington on Nov. 16, though he did mention Time Warner Cable.

He signaled he is more partial to applying structural conditions such as divestitures than to imposing behavioral conditions before allowing a merger that, absent those conditions, would be illegal.

That could indicate the department is indeed planning to seek structural conditions in the AT&T-Time Warner deal, of divesting either the Turner programming assets or DirecTV, rather than allowing the combined company to keep all assets but agree not to use its clout of owning and distributing high-value content to disadvantage competitors.

Related > AT&T-Time Warner: Missed Connection?

The approach could also be a way to publicly justify divestiture requirements outside of the heated political context of President Donald Trump’s attacks on Turner’s CNN and suggestions that a DOJ divestiture requirement would stem not from reasonable antitrust theory and the facts of the merger but from political retaliation by proxy.

One veteran attorney told Multichannel News he had no doubt that if Delrahim or others at the department felt such political pressure, they would resign rather than bow to it, and that there were indeed solid reasons for a divestiture.

“[A]t times, antitrust enforcers have experimented with allowing illegal mergers to proceed subject to behavioral commitments,” Delrahim said, citing the Comcast-NBCU deal as one example, according to a published transcript of his remarks. “That approach is fundamentally regulatory, imposing ongoing government oversight on what should preferably be a free market. And, as 11 senators wrote to the Attorney General earlier this year, the ‘lack of enforceability and reliability of such conditions [can] render them insufficient’ to protect consumers. As we reduce regulation across the government, I expect to cut back on the number of long-term consent decrees we have in place and to return to the preferred focus on structural relief to remedy mergers that violate the law and harm consumers.”

Delrahim suggested that behavioral conditions, though justifiable in some circumstances, are particularly tough to craft and enforce. “[H]ow can antitrust lawyers hope to write rules that distort competitive incentives just enough to undo the damage done by a merger, for years to come? I don’t think I’m smart enough to do that.”

He also invoked the would-be Comcast-Time Warner Cable merger, which collapsed in April of 2015 despite the reigning wisdom that both the DOJ and the Federal Communications Commission would approve it with behavioral conditions.

AT&T has vowed to fight any divestiture. It has likely already signaled to the Justice Department it wants to close the transaction — it must give the government 30 days’ notice — which would force the DOJ’s hand.

‘‘Winter is coming” may be the ominous tagline for HBO’s hit show Game of Thrones, but for parent Time Warner’s pending merger with AT&T, winter is already here. More than a year after the two corporate giants unveiled their $108.7 billion merger plans, a distinct chill has enveloped the union of the largest pay TV distributor and the second-largest content provider, brought on by what many perceive as strong signals from the White House that the deal, once expected to be a shoo-in through the regulatory approval process, is now facing very real hurdles just steps from the finish line.

Media outlets were abuzz last week as reports flooded in that the U.S. Department of Justice, charged with determining whether the AT&T-Time Warner merger would violate antitrust laws, was asking that the combined company divest either its Turner cable network unit or its DirecTV satellite-television operation. The Turner request was most curious, or perhaps revelatory, because it is the home of CNN, the cable news network that President Donald Trump has excoriated in public statements and on his Twitter account as “fake news.”

While the focus is on CNN and Turner, the broader implications — that a sitting president is trying to negatively influence a merger involving a news organization that has been critical of him — are even more chilling. While much of the recent media focus has been on CNN, if the merger is successfully blocked it would send a strong message to media companies that have been waiting for this deal to close to open the merger floodgates.

In a research note, Barclays media analyst Kannan Venkateshwar noted that if AT&T walked away from the deal, other companies such as The Walt Disney Co. or technology companies like Apple would be logical suitors. Even 21st Century Fox, which attempted an $80 billion hostile takeover of Time Warner in 2014, only to be rebuffed, could make a new deal pitch. But the government’s stance may put a damper on any of that. (Last week, Fox was considered to be a takeover target by Disney; read Would a Mouse Eat a Fox?)

The government, in theory, is concerned about media companies becoming too big. AT&T could raise the price of HBO for rivals, create exclusive programming or even refuse to sell to rivals such as Dish Network.

“There are good reasons for the Justice Department to be concerned about this merger,” Columbia Law professor Tim Wu wrote in The New York Times. But “the unfortunate fact is that Mr. Trump has engendered so much distrust in government that everything that any federal agency does these days seems questionable,” he added. Wu said the Justice Department should do a better job of “explain[ing]its concerns about the merger to the public and to Congress.”

Chilling Effect
If a vertical deal such as this (distribution and content) is blocked by the Justice Department, analysts don’t see how other media companies would get comfortable pitching a horizontal deal (content plus content or distribution plus distribution).

“Technology companies in theory could increase competition in the distribution market by acquiring media companies,” Venkateshwar wrote. But if the AT&T-Time Warner deal implodes, all bets are off. “Therefore, while we could see multiple buyers in theory, it is tough to believe such a transaction would be attempted without greater regulatory clarity.”

Most analysts see the new conditions as a message from the Justice Department that it will block the merger. Without Turner and its stable of pay TV networks — like TBS, TNT, Cartoon Network, TCM, CNN and truTV — there is little reason to do a deal. And owning content without the distribution that comes from the DirecTV satellite assets — which have more than 20 million subscribers across the country — flies in the face of the original reasoning for the transaction.

AT&T is apparently ready to draw a line in the sand. When reports surfaced that the DOJ claimed that AT&T offered to spin off CNN to get the deal approved, which the DOJ rejected, AT&T chairman and CEO Randall Stephenson fired off what was for him a heated denial.

“Until now, we’ve never commented on our discussions with the DOJ,” Stephenson said in a Nov. 8 statement. “But given DOJ’s statement this afternoon, it’s important to set the record straight. Throughout this process, I have never offered to sell CNN and have no intention of doing so.”

At The New York Times’s Dealbook conference in New York on Nov. 9, Stephenson doubled down on his insistence that CNN was not for sale. He also said he has not felt pressure from the government to sell the network, which may be a case of carefully selecting his words. Early reports on the DOJ’s demands centered on selling Turner, CNN’s parent, or DirecTV.

Related: AT&T’s Stephenson: 'No Intention' to Sell CNN

But Stephenson echoed what others have said regarding a sale of CNN, Turner or DirecTV to win approval of the deal: It makes little sense.

When AT&T officially announced the merger on Oct. 22, 2016, the telco saw huge opportunity in pairing Time Warner’s content with AT&T’s distribution. Stephenson brought home that point again at the Dealbook conference.

“One of the key benefits of putting these two companies together is to stand up a new advertising capability,” Stephenson said. “We have built an amazing distribution platform — 150 million mobile subscribers, the largest pay TV base in the United States, a huge broadband base. There’s a lot of information and data that we think can be used to stand up a new advertising business. Pairing that with the Turner advertising inventory is a really powerful thing, we believe. That’s what we aspire to do. Selling CNN makes no sense in that context.”

But despite Stephenson’s protestations — he also said the Nov. 6 meeting with the DOJ, the fulcrum of all the recent controversy, was “productive” — Time Warner stock continues to sink.

In just the past two weeks, Time Warner shares have dropped nearly 15% from $102.20 per share on Oct. 19 to $87.05 per share on Nov. 9, precariously closer to their price just prior to the deal announcement ($82.99 each) and nearly 20% below the $107.50 per share at which AT&T valued the company for the deal.

Related: Wall Street Looks at Options for Time Warner Assets

If the DOJ decides to block the deal — and indications are that, unless the agency has a dramatic change of heart, it will — the first step will be for the government to file a suit stating that the deal violates antitrust rules. Stephenson said if that is the case, AT&T wants the case expedited to further accelerate the process.

“We are prepared to litigate now,” Stephenson said at the Dealbook conference.

A Justice Department suit to block the deal would be nearly unprecedented: Stephenson said the agency hasn’t challenged and defeated a vertical merger in more than 40 years. It is even more surprising given that the new head of DOJ’s antitrust division, assistant attorney general Makan Delrahim, said months ago that he didn’t see any problems with the merger.

“It reinforced what we thought about the transaction,” Stephenson said of Delrahim’s earlier comments. “He made comments that were exactly what we thought about this transaction going in.”

He added that the Nov. 6 meeting with DOJ was more of a “getting to know you” session, and the next step is to continue the process.

“As you might guess, when you’re doing a big negotiation, you spend a lot of time just getting to know each other,” Stephenson said. “You spend a lot of time trying to understand what the bid/ask is in a transaction like that. I think we had a very productive meeting on Monday. I think we both learned a lot about where each other are. Now we continue this process to see if we can get to a negotiated settlement.”

If the DOJ is pushing for asset divestiture, it would appear to be more in line with the president’s stance on big mergers than the head of the agency’s.

At a speech at the New York University School of Law on Oct. 27, Delrahim said that competitive impact was the main focus for the agency when reviewing mergers.

“That’s an important part of the process, because blocking a procompetitive transaction can be as dangerous as clearing an anticompetitive one,” Delrahim said, according to a transcript on the DOJ website. “The goal should be to promote, not stifle, competition.

“Our role in the antitrust division is the pursuit of justice in the marketplace,” he continued. “When we do our jobs correctly, we protect the competitive process around which our economy is organized and on which the American Dream is premised. And we do so through law enforcement consistent with limited government and the rule of law. It’s a compelling mission.”

Related: FCC's Pai Says DOJ Will Do Right Thing With AT&T-Time Warner

Delrahim’s boss, Trump, has made his stance on CNN clear since his campaign, when in a speech in Gettysburg, Pa., last October he said he would block the AT&T-Time Warner merger because it created “too much concentration of power in the hands of too few.”

Perhaps even more chilling would be implications on past and future deals if the government sues to block the AT&T-Time Warner merger and is successful. Trump has vowed to dismantle Comcast’s 2011 purchase of NBCUniversal. In the same Gettysburg speech, he said that deal created “one massive entity that is trying to tell the voters what to think and what to do.”

Stephenson also downplayed Trump’s role in influencing the DOJ, adding that he has only had contact with Justice officials throughout the merger process. But no one is suggesting that Trump is actively involved in the approval process. Several reports have said that DOJ officials are well aware of the president’s feelings toward the deal, and especially CNN, through his countless Twitter posts and comments criticizing the network.

Shifting Political Winds
But any presidential opposition to the deal could also have the reverse effect. Already several organizations that have publicly opposed the merger because it concentrates too much media power in one entity are beginning to rethink that position.

Free Press, which in the past has said it would back a requirement that AT&T spin off CNN or Turner to decrease media concentration, said it doesn’t approve of such moves if they are merely a manifestation of Trump’s apparent hatred of the news media.

“While there are plenty of good reasons to oppose AT&T’s Time Warner takeover, punishing CNN for trying to hold this administration accountable isn’t one of them,” Free Press president Craig Aaron said last week. “No matter where you come down on this merger, everyone should agree that the government shouldn’t base antitrust decisions or FCC rulings on whether it likes a newsroom’s coverage.”

For its part, AT&T is forcing the government to either go big or go home. In a research note, BTIG media analyst Richard Greenfield noted that AT&T certified compliance with the DOJ on Nov. 6, which started a 30-day shot clock for the government to make a decision either way. If litigation is filed, it could go on for at least four to five months even at an expedited rate, meaning AT&T would miss its earlier target of a year-end close and would be hard pressed to complete the deal by April 22, the official termination date for the merger — and Stephenson’s birthday.

The AT&T chief claimed he didn’t know about compliance certification, but expressed his frustration with the process.

“We need this to move along,” Stephenson said. “This has been well over a year for a vertical merger, and we each need to take actions that will get this to closure. Either we settle or we litigate, one of the two. I think we’re both aligned on that.”

Washington bureau chief John Eggerton contributed to this report.

The president has tapped a Justice Department vet to vet mergers as assistant attorney general atop the Antitrust division.

The White House signaled late Monday that it intended to nominate Makan Delrahim for the post.

Most recently Delrahim was deputy assistant and deputy counsel to the president, joining the DOJ in January from a Los Angeles law firm, where he had been partner.

The White House did not identify the firm, but according to OpenSecrets, which tracks the professional movements of government employees, it was Brownstein, Hyatt, which has represented Comcast, NCTA: The Television & Internet Association and Dell, among others.

Before that, during the George W. Bush Administration, Delrahim was deputy assistant attorney general for the DOJ's Antitrust division and the Attorney General’s Task Force on Intellectual Property. He is also former chief counsel on the Senate Judiciary Committee.

Justice's Antitrust Division gets most of the Hart-Scott-Rodino antitrust reviews of media mergers, including its current review of the AT&T-Time Warner merger, which Trump, as a candidate, threatened to try to block. In the interim, the pro-business, anti-regulation Trump has come more to the fore, raising the odds that that threat was more about his anger at the media in general than an anti- merger philosophy.