Tag: Monopoly

No Political Interference Here………

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Ford, Honda, BMW, and VW agreed to make cars that meet California’s air quality standards.

The Trump administration is trying to strip California of its rule-making authority, and roll back fuel economy and air quality standards.

Now the DoJ has launched an antitrust investigation into the auto-makers’ agreement, because ……… Attorney General Robert Barr is a corrupt partisan rat-f%$#, I guess?

The Justice Department has launched an antitrust investigation into four auto makers that forged a deal with California on vehicle-emissions standards, escalating the conflict between the Trump administration and Sacramento over environmental regulations.

Justice Department lawyers are seeking to determine whether Ford Motor Co. , Honda Motor Co. , BMW AG and Volkswagen AG broke federal competition law by agreeing with California to follow tailpipe-emissions standards beyond those proposed by the Trump administration, according to people familiar with the probe.

California officials, joined by Democratic lawmakers and environmentalists, branded the probe a political hit orchestrated by a White House angry over any attempt to subvert its authority.

“This investigation is nothing but an attempt by the Trump Administration to retaliate against these companies and stoke fear in others,” said U.S. Sen. Tom Carper of Delaware, the top Democrat on the Environment and Public Works Committee.

………

President Trump has sought to roll back Obama-era mandates intended to reduce the auto industry’s contribution to climate change. California regulators have said they are willing to ease mandates, but they don’t want to go as far as the proposals from the Trump administration, which has said it wants to eliminate all upcoming increases in efficiency requirements.

The administration is challenging the legal authority that has given the state de facto control over environmental regulations for roughly a third of the U.S. car market.

The Justice Department sent letters to each of the companies within the past two weeks to alert them of the department’s interest and to request information, according to one of the people familiar with the matter. The department in the letters said no conclusions have been reached, but also said the deal may have antitrust implications, the person said.

On Friday, top lawyers at the Transportation Department and Environmental Protection Agency sent a letter to California’s top air regulator, Mary Nichols. It urged her to dissociate the state from the four auto makers, saying the commitment may result in undefined legal consequences.

This stinks worse than Trump’s golf game.

Speaking of Cable Company Rat-F%$#ery………

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People hate their internet companies.

Whether it is Comcast, Charter, CenturyLink, Verizon, Frontier, etc. their business plan is all about creating and maintaining a monopoly, and then extracting rents with over-priced and under-performing internet.

It’s why US internet costs are among the highest in the developed world while having the lowest performance.

The response of the incumbent providers has been to lobby to maintain their monopolies, doing things like forbidding municipal broadband.

Well, it appears that their lobbying is losing its effectiveness, even in Republican dominated states like North Carolina:

Broadband expansion legislation that stalled earlier this year after strong opposition from cable and telecommunications providers cleared a key N.C. House committee Thursday, but only after a long debate on the role of government in providing internet access.

House Bill 431, the FIBER NC Act, would eliminate existing state restrictions on local government investments in broadband infrastructure and put in place a system that would allow counties and municipalities to build out the infrastructure and then lease it to a private provider.

Members of the State and Local Government Committee debated for an hour and half before approving the bill in a 13-9 vote.

The majority, a mix of the committee’s Democrats and a handful of Republican legislators from rural districts, also defeated an amendment to require a local referendum on public broadband investment by the same margin.

The bill was introduced early in the session but has been opposed by the state’s main internet providers, who say it is government encroachment into private enterprise.

North Carolina might not be the last place where I would expect to see such a bill progressing, but it’s the second or third to last place where I would expect to see it.

People are getting sick and tired of the looting.

Rule 1 of Connectivity is that Phone and Cable Companies will F%$# You Like a Drunk Sorority Girl

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Rule 2 is SEE RULE 1.

Case in point, AT&T lying to the court about the effects of its merger with Time Warner:

When AT&T acquired Time Warner last year for $85 billion, the companies said the deal would be great for consumers, who would benefit from lower prices and improved service.

The Justice Department said the opposite, predicting the merger would give AT&T so much market power that price hikes and channel blackouts were all but inevitable.

And now we know. The government was right.

AT&T wasted no time in raising the price of its DirecTV satellite-TV service by $5 a month. It then raised the price of its DirectTV Now streaming service by $10 a month. (The company said last week DirecTV Now is being renamed AT&T TV Now.)

More than 6.5 million of AT&T’s DirecTV and U-verse pay-TV customers are currently cut off from CBS channels because AT&T says CBS wants too much money for its programming.

Meanwhile, more than 12 million Dish Network and Sling TV subscribers have lost access to AT&T’s HBO and Cinemax channels because, according to Dish, AT&T wants too much money for its own programming.

Put more succinctly, AT&T, after raising subscriber costs, wants to pay as little as possible for channels included on its pay-TV services. But it wants as much as possible from other pay-TV services for its own channels.

And it’s willing to hold consumers hostage to get what it wants.

“When you start seeing blackouts, it’s obvious you’re looking at a merger that’s not serving consumers very well,” said Herbert Hovenkamp, a law professor at the University of Pennsylvania and one of the nation’s top antitrust authorities.

………

U.S. District Judge Richard J. Leon ruled last year — and was subsequently upheld by an appellate court — that the government was mistaken when it warned of consumers being harmed by the merger.

Leon said it would be counter-productive for a merged AT&T/Time Warner to withhold its own channels from competing pay-TV providers or black out competitors’ channels, and thus the likelihood of this happening was low.

“The evidence of his being wrong is bordering on the absurd,” said Christopher Sagers, a professor at the Cleveland-Marshall College of Law.

………

“Plain and simple, the merger created for AT&T immense power over consumers,” Andy LeCuyer, Dish’s senior vice president of programming, said in a statement.

“AT&T no longer has incentive to come to an agreement on behalf of consumer choice,” he said. “Instead, it’s been given the power to grab more money or steal away customers.”

………

Einer Elhauge, a professor at Harvard Law School, said the current circumstances “seem to be precisely what the Department of Justice predicted would happen after the merger of AT&T and Time Warner, and precisely what AT&T successfully persuaded the trial court was implausible for it to ever do post-merger.”

His verdict? “It looks like the court just got it wrong.”

If so, what if anything can be done?

There was once a time when regulators decided AT&T had too much power over the phone industry and decided to break up the company.

I wonder if the same case now can be made for AT&T’s power over the TV industry.

………

The antitrust experts I spoke with said AT&T’s post-merger behavior makes a strong case for separating pay-TV and programming companies — but it may be too late to fix the problem.

I hope that it’s not too late, but once again, Robert Bork’s laissez faire theories of monopolies and competition are shown to be wrong.

In fact they are not just wrong, they are delusional, and I would argue deeply hypocritical.

How Can they Both Lose?

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The Retail Industry Leaders Association, a front for Walmart, Target, and Best Buy, has offered to help the Federal Trade Commission go after Amazon and Google.

I love it when evil goes up against evil, because it’s a win-win for the rest of us:

A leading U.S. retail group, whose members include Walmart, Target, Best Buy and others, has penned a letter to the Federal Trade Commission that details its concerns over big tech companies’ dominance. The letter specifically calls out Amazon and Google for their control over the majority of internet product searches, how price and product information reaches consumers and other concerns.

The letter, written by The Retail Industry Leaders Association (RILA), urges the FTC to take a closer look at the big tech platforms. The group also offers to help in any antitrust investigations.

“It should…be quite concerning to the Commission that Amazon and Google control the majority of all Internet product search, and can very easily affect whether and how price and product information actually reaches consumers,” write the RILA. “Moreover, these firms are extraordinarily adept at determining how small changes in the way in which information is conveyed affect consumer behavior — given that nearly everything they do is driven by big-data science and machine learning models,” the letter continues.

………

The group asks the FTC to consider rules and enforcement actions that require companies to disclose where products come from, whether they’re new or used, whether their sale is authorized and how the price from one seller compares to others. Amazon is mentioned here as an example of the problems that can arise when a firm controls an “essential platform” like Amazon Marketplace and also competes on that same platform.

Additionally, the letter asks the FTC to look beyond the consumer benefit of lowered prices or free services — sometimes by subsidizing the platform with other profit streams.

Here is hoping that they manage to reduce each other to a bloody pulp.

Sometimes, The Ratf%$#s Lose

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In this case, the rodent breeders in question are Qualcomm, who has been requiring companies to both buy their (protected by patent) chips, AND to pay licensing fees on those same patents.

I do not understand how patent exhaustion would not prevent this.

It appears that federal judge Lucy Koh has a similar view, and found Qualcomm is guilty of serious anti-trust violations, and issued an injunction preventing them from getting two bites at the Apple:*

Qualcomm abused its monopoly on critical chip patents for decades, a US federal judge in California said on Wednesday in a decision with radical implications for the cellphone market.

In a 233-page opinion [PDF] Judge Lucy Koh came down heavily on the chip designer, saying it had violated antitrust laws and “strangled competition” by insisting that companies license its patents at unreasonable prices before being allowed to purchase its chips. Qualcomm chips are an essential component in modern mobile phones.

Koh also issued a permanent injunction that orders Qualcomm to sell its chips to companies without requiring them to license its patents. She also ordered that the company be monitored by federal regulators for seven years.

………

Qualcomm has said it will appeal the decision and seek an immediate stay on the injunction. “We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” the company said in a statement. The impact of the decision on Qualcomm’s bottom line was reflected in an instant 12 per cent drop in its share price.

………

“Qualcomm’s licensing practices have strangled competition in the CDMA and premium LTE modem chip markets for years, and harmed rivals, OEMs and end consumers in the process,” Judge Koh wrote. “Qualcomm’s licensing practices are an unreasonable restraint of trade.”

Explaining her decision to grant a permanent injunction, she argued “it makes little sense for the court, having found that Qualcomm’s patent licenses are the product of anti-competitive conduct, to leave those licenses in place.” The Snapdragon system-on-chip designer was charging “unreasonably high royalty rates,” Koh said.

………

At the core of the case is that fact that Qualcomm possesses a number of “standard essential” patents on chips that are critical for mobile phones to function. It then used that position to force companies to license its patents – demanding many times a fair market rate – before being allowed to buy its chips.

Experts highlighted the fact that Qualcomm would also only license its patents at the device level, as opposed at the component or chip level – which forced companies to pay it more and gave it greater control of the market.

Here’s hoping that this holds up on appeal.

*Pun intended.

The Scum of the Earth: No, This Is Not Comcast Edition

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As soon as a particularly gullible judges signed off in its merger with Time Warner, AT&T raised its prices, the exact opposite of what it claimed:

In light of AT&T’s decision to raise the prices on DirecTV Now subscribers by $10/month, and to drop channels like MTV, Comedy Central, BET, and BBC America (while adding more AT&T-owned content to the bundle), it’s worth reviewing some of what the telecom giant claimed during the recent trial over its merger with Time Warner:

[C]onsumer prices will not go up.

Modern antitrust law recognizes that mergers between suppliers, such as Time Warner, and distributors, such as AT&T, almost always create efficiencies and synergies that lead to lower consumer prices and greater innovation.

Vertical integration raises antitrust concerns only in the rare case where the government can prove that the merger will hobble rivals’ ability to check the merged firm’s pricing conduct, thereby allowing the merged firm to raise its own prices above competitive levels.

[T]his merger is likely to enhance competition substantially, because it will enable the merged company to reduce prices.


You can read more for yourself here and here. The rest of AT&T’s arguments were just about as (in)accurate, and it’s not the first time AT&T’s rosy claims have been proved false.

The current standards for antitrust in the US are way too lax.

From the Book of St. Jesse of Unruh

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If you can’t take their money, drink their booze, screw their women and look them in the eye and vote against them, you don’t belong here.

—Jesse Unruh, former Speaker of the California Assembly and State Treasurer

I could not help but reflect on Unruh’s quote when I read Politico wringing its hands over Elizabeth Warren getting thousands of dollars in Silicon Valley and then calling for the Breakup of Amazon, Google, and Facebook.

While I still favor Bernie Sanders, I have to say that Elizabeth Warren has taken Jesse Unruh’s advice to heart, and I approve:

While Sen. Elizabeth Warren was railing against big tech companies, she was taking their money — plenty of it.

The Massachusetts Democrat, who is powering her presidential campaign with a bold proposal to break up the likes of Amazon, Google and Facebook, in September accepted a $2,700 contribution from Sheryl Sandberg, Facebook’s chief operating officer. But Sandberg, whose donation went unnoticed at the time, was just the biggest name from Silicon Valley to give to the senator: Warren took at least $90,000 from employees of Amazon, Google and Facebook alone between 2011 and 2018.

The figure includes only donors who gave at least $200 over either of her two Senate campaigns; and just those who listed their employer. Warren is carrying over millions of dollars she raised for the Senate in the last cycle to her 2020 presidential run.

While the donations flowed to Warren’s committee, she was accusing Google, Amazon as well as Apple of using their powerful platforms to “lock out smaller guys and newer guys,” including direct competitors. She’s also criticized the huge sums Silicon Valley firms spend on federal lobbying and taken on Amazon and others over their treatment of workers.

Now, Warren has put the trust-busting message front and center in her presidential campaign. In a blog post last week, which she repeatedly referred to at the tech industry conference South by South last weekend in Austin, Texas, Warren called for unwinding Facebook’s acquisition of WhatsApp and Instagram; Amazon’s consumption of Whole Foods and Zappos; and Google’s takeovers of Waze, Nest and DoubleClick. Warren later confirmed that her plan would apply to Apple, the biggest player in tech and one of the world’s biggest companies.

“Either they run the platform or they play in the store,” she said over the weekend. “They don’t get to do both at the same time.”

I approve.

Smedly Butler* Would Say That This Makes War Look Honest

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I am referring, of course, to the American healthcare system, specifically pharmaceutical manufacturers:

Executives at more than a dozen generic-drug companies had a form of shorthand to describe how they conducted business, insider lingo worked out over steak dinners, cocktail receptions and rounds of golf.

The “sandbox,” according to investigators, was the market for generic prescription drugs, where everyone was expected to play nice.

“Fair share” described dividing up the sales pie to ensure that each company reaped continued profits. “Trashing the market” was used when a competitor ignored these unwritten rules and sold drugs for less than agreed-upon prices.

The terminology reflected more than just the clubbiness of a powerful industry, according to authorities and several lawsuits. Officials from multiple states say these practices were central to illegal price-fixing schemes of massive proportion.

 God bless our private sector healthcare.

*General Smedly Butler’s best known quote is, “I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism.”

A Bunch of Mindless Jerks Who’ll Be the First Against the Wall When the Revolution Comes.

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What a surprise. As soon as Ajit Pai and his evil minions™ repealed Net Neutrality, the Telcos started trying to shut down rivals.
In fact, they were doing so well before the repeal, because the FCC didn’t have time to find and fine them.

Capitalism at its finest:

US cellphone networks are all throttling video to some extent, providing lower-quality stream to their customers, and some are purposefully undermining Skype as an alternative to their services.

That’s the upshot of a ten-month study by Northeastern University’s College of Computer and Information Science set up to see what impact, if any, the end of net neutrality rules had had only ordinary users.

On the pure question of whether the FCC’s decision to scrap its own rules has changed cellphone operators’ behavior, the answer is no, they haven’t – they were throttling before and they have continued to do so.

However, the authors note that such throttling was actually banned under the previous rules. So it was likely the case that there was not enough time for the FCC’s enforcement department to clamp down on that behavior before the rules were rescinded.

As to the throttling itself, intriguingly it is not consistent across video providers or operators, suggesting that there may be deals between certain mobile phone networks and certain video streaming companies to let their videos pass through unthrottled.

And if that’s the case, then of course there is a pressure point that cellular networks can use to extract money from video companies – which is exactly what net neutrality advocates are concerned about. But there is no smoking gun as such.

Demand and supply


It could be that the throttling is activated to tackle network congestion: as available bandwidth is consumed by people streaming and downloading stuff over the airwaves, operators may limit speeds to ensure an even level of quality-of-service for everyone in a particular cell, neighborhood, or city.

What is worrying, though, is the fact that some mobile operators are throttling a clear competitor in the form of Skype. Sprint seems to be the worst offender but Boost was also seen to be throttling the voice-and-video streaming service.

FYI, Boost is Sprint, in the US at least, so the rat-f%$#ery is actually from the same company.

Rule one of telecommunications and last-mile connectivity providers are that they contemptible greed-heads who need to be kept on a short leash.

Rule two is see rule one.

Time to Break Up Facebook, Part MMMMCLXIV

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Facebook and Google’s hegemony in the online ad world has reached its inevitable result, it has been revealed that Facebook has been aggressively defrauding advertisers over the effectiveness of its video ads.

If I had a chance to say anything to Mark Zuckerberg about this, it would be, “Don’t be too proud of this technological terror you’ve constructed.

According to a newly public filing in an ongoing lawsuit, a group of advertisers now says that Facebook has been willfully withholding information about how much time its users spend watching paid ads—if more people spend more time watching ads, then those ads can command higher rates.

The case of LLE One LLC et al. v. Facebook, as first reported by The Wall Street Journal, was filed two years ago and is currently pending in federal court in Oakland, California. In it, the plaintiffs say that, as part of the discovery from their lawsuit, they have learned that Facebook’s “action rises to the level of fraud and may warrant punitive damages.”

As the plaintiffs’ attorneys continued:

In addition to Facebook knowing about the problem far longer than previously acknowledged, Facebook’s records also show that the impact of its miscalculation was much more severe than reported. The average viewership metrics were not inflated by only 60-80 percent; they were inflated by some 150-900 percent.

There are no good metrics because there are no independent metrics, and there won’t be, because Facebook so dominates the space that they can, and do, refuse to provide their underlying numbers to independent verification.

The market no longer serves as a corrective, and the alternatives are either aggressive and pervasive regulation, or broken up to its component parts, or (my choice) both.

Break Up Facebook: Reason LVLMMXCII

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Facebook’s “Head of news partnerships”, the contemptible Campbell Brown (Charter School shenanigans) has threatened media organizations that choose not to partner with the social media company:

A senior Facebook executive told Australian media companies that if they didn’t cooperate with the social network, their businesses would die.

According to a report by The Australian, Campbell Brown, Facebook’s head of news partnerships, told a group of more than 20 broadcasters and publishers that she wanted to help media companies develop sustainable business models through the platform.

“We will help you revitalise journalism … in a few years the ­reverse looks like I’ll be holding your hands with your dying ­business like in a hospice,” she said, in comments corroborated by five people who attended the meeting in Sydney on Tuesday.

The Australian also reported that Brown said that Facebook’s chief executive, Mark Zuckerberg, “doesn’t care about publishers but is giving me a lot of leeway and concessions to make these changes”, although both Facebook and Brown vehemently deny this comment was made, referring to a transcript they have from the meeting.

Facebook would not release the transcript from the meeting.

Yes, this is a reason to break up the company.  This is way too much power for a private actor to have.

Also, I will note something that Yves Smith has said frequently, “If your business depends on a platform, your business is already dead.”  (The media graveyard is littered with the remnants of companies that have come to depend on a 3rd party platform.)

Speaking of Brain Dead Antitrust Enforcement………

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The DoJ is appealing the ruling on the AT&T-Time Warner merger, and they are using some fairly strong language to do this:

The Justice Department argued Monday that a trial judge ……… when he allowed AT&T Inc.’s acquisition of Time Warner Inc., as a host of new details about the antitrust trial became public for the first time.

The government’s arguments came in a brief filed in federal appeals court, where the Justice Department continues to challenge the more than $80 billion cash-and-stock deal—even after the companies completed the transaction in June upon winning a six-week trial.

U.S. District Judge Richard Leon had ruled for the companies, saying the government didn’t come close to proving its claims that the deal would yield higher prices and less competition in the pay-TV industry. But the Justice Department called the decision erroneous in its brief filed Monday with the U.S. Court of Appeals for the District of Columbia Circuit.

The department said the judge ignored the fact that corporations will do what they can to maximize profits and instead accepted without reservation the testimony of defendants’ executives.

(Emphasis mine)

The judge seems a hot mess: he berated the DoJ for using lawyers that he saw as too young, and a sidebar included a discussion of donations for the unveiling of his official portrait.

A question to the lawyers out there, is sort of crap normal, or is Richard Leon entering Colonel Kurtz territory.

Because Dealing with the Real World Equivalent of Lex Luthor Works out so Well

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Of course, I am referring to Lex Luthor lookalike Jeff Bezos, and it increasingly appears that Amazon is increasingly using its contracts with state and local governments to lock out vendors who don’t use their platform.

Also, it looks like the promised cost savings have not materialized:

Amazon has already helped reshape the retail landscape for books, clothes and groceries. Now the online retail giant is moving into local government procurement. This new business venture is raising concerns that cities, school districts and counties will end up spending more money than they have to on supplies.

Early last year, Amazon contracted with the Prince William County School District in Virginia and by extension earned a contract with U.S. Communities, a purchasing group with public-sector members in all 50 states. More than 1,500 public agencies have since signed on to buy products through Amazon Business, the B2B counterpart to the company’s popular Prime service.

While Amazon and U.S. Communities have touted their partnership as a cost-saver for public agencies and a boon for suppliers, a new report finds that Amazon Business does not always deliver the savings it promises. The report by the Institute for Local Self-Reliance, a frequent critic of Amazon, also argues that Amazon is increasingly cornering the supply market by forcing vendors to sell their products through Amazon.

………

On a press call about the report, Mike Mucha of the Government Finance Officers Association explained the contractual problems with an example of a government choosing a new type of software, in which Apple is expected to be one of the proposed vendors.

“You can structure that process so that you can truly evaluate the merits of [different companies] through a fair process. Or you can include a requirement in the RFP [request for proposal] that says, ‘The logo must be in the shape of a fruit,'” he says. “It’s not a real RFP.”

Prince William County Public Schools created a similar bid in 2016 when it required 10 product categories in an RFP for office supplies. Of the 12 firms that submitted bids, only Amazon was able to supply all 10 of the categories requested.

Additionally, the Amazon contract differs dramatically from traditional procurement contracts between governments and businesses. While government purchases are usually based on fixed prices, the Amazon Business prices can vary by the day and even by the hour. The report analyzed purchases made by a California school district and found that buying those supplies from a local vendor as opposed to Amazon would have saved the district between 10 and 12 percent.

………

If public agencies have long-established relationships with certain vendors, they are now only allowed to continue buying from them if those vendors join Amazon’s marketplace.

Seriously, we need aggressive and broad antitrust enforcement today.

This is Intriguing

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Harold Feld, Sr. VP and lawyer at Public Knowledge, has an interesting way to measure excessive market power for anti-trust purposes, that one can measure the the cost of exclusion:

In my last blog post, I explained my working definition for what constitutes a “digital platform.” Today, I focus on another concept that gets thrown around a lot: “dominant.” While many regulations promoting consumer protection and competition apply throughout a sector, some economic regulations apply to “dominant” firms or firms with “market power.” Behavior that is harmless, or potentially even positive when done by smaller companies or in a more competitive marketplace, can be anticompetitive or harmful to consumers when done by dominant firms — regardless of the firm’s actual intent.

For reasons discussed in my previous blog posts, defining what constitutes “dominant” (or even identifying a single market in which to make such a determination), presents many challenges using the traditional tools of analysis favored by antitrust enforcers and regulators. I therefore propose that we use the cost of exclusion (“COE,” because nothing in policy is taken seriously unless it has its own acronym) as the means of determining when we need to apply regulation to “dominant” firms. That is to say, the greater the cost to individuals and firms (whether as consumers or producers or any of the other roles they may play simultaneously on digital platforms), the greater the need for regulations to protect platform users from harm. If a firm is “too big to lose access to,” then we should treat that firm as dominant.

It’s not the only potential standard for antitrust, but, particularly in the context of large digital platforms, it provides an additional tool to justify regulating large dominant firms.

Now if only antitrust can put the ahistorical and dishonest writings of  Robert Bork behind it.

Rule #1 of AT&T:

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AT&T will lie and f%$# with consumers, regulators, and judges.

Rule number 2 is see rule 1.

Case in point, after getting a federal judge to rule in their favor, because he saw no downside to end users, (an unnecessarily narrow view that has been promulgated by the right wing fof decades) AT&T promptly raised rates on users.

It comes as no surprise then, that the government ignored Judge Leon’s recommendation not to appeal, and file an appeal anyway:

AT&T recently defeated the DOJ’s challenge to their $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality to dominate smaller competitors. In fact, net neutrality was never even mentioned at the multi-week trial.

The trial did a wonderful job showing how modern antitrust law does a dismal job policing companies that dominate both the conduit to the home (wireless, wired connection) and the content running over it. And shortly after Leon signed off on the deal, AT&T got right work… being AT&T.

The company had made repeated promises before, during and after the trial that the merger would only result in price reductions and other wonderful things for consumers. But with the ink barely dry on the deal, AT&T quickly began raising rates on its streaming video services, eliminating promo offers providing free HBO to its wireless customers, jacking up the price of the company’s unlimited data wireless plans, and imposing bogus new fees on those same subscribers. Most of these moves were expected as AT&T tries to recoup some of the monumental debt incurred by its endless quest to grow ever larger.

Initially, the DOJ stated it wouldn’t appeal its court loss, even though Leon’s myopic ruling opened the door to the idea. But the DOJ clearly sees something in AT&T’s recent moves that gives it additional ammunition for another shot at the merger, so it’s appealing the judge’s ruling to the United States Court of Appeals for the District of Columbia Circuit according to a DOJ filing (pdf).

Leon’s ruling essentially said that there had to be a showing of direct and immediate harm to consumers for the merger to be stopped, which ignores issues such as the political effects of market dominance and barriers to entry, which figured far more prominently in the legislative intent of the Sherman Antitrust Act when it was passed over 125 years ago.

In fact, the idea of consumer well being wasn’t even a concept at the time the law was passed.

The consumer harm standard is a fig leaf first pushed by Robert Bork over 40 years ago in order to gut antitrust enforcement.

Three Stopped Clock Moments in 1 Week

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First, notwithstanding the ruling by a George W. Bush appointed judge approving the AT&T — Time Warner merger, Trump and his Evil Minions™ were correct in opposing that merger.

Judge Richard Leon noted the lack of immediate negative consequences to the consumer, the classic analysis developed by Robert Bork, but that analysis is legally, functional, and historically bankrupt. 

Even a cursory analysis of antitrust law reveals that Congress’s original intent was driven by concerns about the barriers to entry for new competitors and the political power of monopolies than it was consumer welfare.

Second, Trump was right in the core of his dispute with the other G7 members in that he trade deals should not be an eternal and unchanging edifice upon which our world is based.

His proposal for sunset clauses in trade deals, so that countries can reevaluate policies as conditions change, is correct.

To quote Keynes, “When the facts change, I change my mind. What do you do?”

He gets almost everything wrong. But last weekend Donald Trump got something right. To the horror of the other leaders of the rich world, he defended democracy against its detractors. Perhaps predictably, he has been universally condemned for it.

His crime was to insist that the North American Free Trade Agreement (Nafta) should have a sunset clause. In other words, it should not remain valid indefinitely, but expire after five years, allowing its members either to renegotiate it or to walk away. To howls of execration from the world’s media, his insistence has torpedoed efforts to update the treaty.

In Rights of Man, published in 1791, Thomas Paine argued that: “Every age and generation must be as free to act for itself, in all cases, as the ages and generations which preceded it. The vanity and presumption of governing beyond the grave is the most ridiculous and insolent of all tyrannies.” This is widely accepted – in theory if not in practice – as a basic democratic principle.

Finally, of course, is his talks with the DPRK, which has shown more progress than 20 years of refusing to negotiate on an one on one and direct basis and sanctons.

Of course, this is Trump, and he, and his administration, could f%$# up a 2 car funeral, so the probability that this will eventually lead to concrete positive developments is a rather remote.

Read Harold Feld

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He is a lawyer for the Public Knowledge, which advocates for, “Policies that serve the public interest.”

He lives and breaths this stuff, and he has looked at the merger between AT&T and Time Warner, and the rumored remedies that the US Department of Justice is demanding, and concludes that the remedies demanded by the government, including requiring a divestiture of CNN, have extensive precedent and are reasonable in the context of the industry:

I want to start by applauding Randal Stephenson for coming out quickly and denying the rumors that DoJ asked them to sell CNN as the price of getting the merger done. At the same time, however, he acknowledged that negotiations were “complicated,” and that he and recently confirmed Asst A.G. for Antitrust Makan Delrahim were still “getting to know each other” and “figure out the ask on the other side of the table.” He also made it clear that, if DoJ does challenge, AT&T is prepared to go to court and are confident they will win.

AT&T is generally pretty good at persuading everyone that DoJ doesn’t really have a case against them. As folks may recall, despite the fact that the proposed AT&T/T-Mo transaction violated just about every basic tenant of existing antitrust law, AT&T managed to convince everyone for the longest time that DoJ was just playing hardball with them and didn’t really mean it because DoJ didn’t really have a case. While Stephenson refused to discuss what was negotiated, the rumors suggest it was a demand to divest either DIRECTV or the Turner Broadcasting cable channels (which include CNN, as well as TNT, HBO and a bunch of other real popular programming.) Once again, you have antitrust experts who do not have any particular experience with cable mergers shaking their heads and predicting that DoJ has no case.

In fact, demanding divestiture of either the must have content or the DIRECTV distribution platform is precisely the remedy you would expect if you believe the deal presents significant harm because of the vertical integration issues. That’s been the position of my employer, Public Knowledge, which has opposed the transaction since AT&T announced the deal. (That predates Trump’s election, for those of you wondering.) If you want a more detailed understanding of the theory of the harms, you can find it in my boss Gene Kimmelman’s testimony to Congress here. While generally true that vertical deals are hard to challenge, the cable industry has long been something of an exception, and the remedy here is similar to what the FTC imposed on the AT&T/Turner deal in 1996, where the FTC imposed stock divestitures and restructuring to eliminate the voting interest of John Malone and Liberty Media because of Malone/Liberty’s ownership TCI, which was then the largest cable operator in the United States (25% national market share). Given the massive criticism of “behavioral” remedies and a call to return to “structural” remedies from the right and the left, it’s unsurprising that DoJ would want actual divestiture rather than go the Comcast/NBCU consent decree route.

I would add that consent decrees tend to have limited effect over the long run, and that Public Knowledge has opposed this merger since before Trump’s election.

While a lot of people have tried to cast opposition to the deal as political interference by Trump and his Evil Minions™, it is clear that opposition could be easily justified.

This might be another case of a stopped clock being right twice a day, or it might be a vendetta by Donald Trump. 

Just don’t jump to conclusions yet.

Read the rest.

More of This

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Tronc, the company formerly known as Tribune Publishing, has failed in its bid to buy the Chicago Sun Times and the Chicago Reader.

Instead, a group of investors, including the Chicago Federation of Labor, purchased the publisher of the two papers, maintaining its independence of one of the largest media conglomerates in the nations:

In the end, one man made all the difference.

Edwin Eisendrath, the former Chicago alderman who ran losing campaigns for governor and congressman earlier in his career, just won the most unlikely challenge he’d ever undertaken: He kept the Chicago Sun-Times independent and out of the clutches of Chicago Tribune owner tronc. “It was bashert,” Eisendrath told me, using the Yiddish word for “destiny.” How else to explain the odds he overcame to make it happen?


On Wednesday, Eisendrath and a coalition of labor unions and individual investors closed on the purchase of the daily Sun-Times and the alternative weekly Chicago Reader from Wrapports Holdings LLC. Terms of the deal were not disclosed, but sources said the key was securing more than $11.2 million in escow to cover projected operating losses over the next two years.

“Today’s deal to buy the Sun-Times preserves two independent newspaper voices in Chicago, a rare thing in America these days,” Eisendrath tweeted. “We wanted to make sure that Chicago had a genuine voice with honest and good reporting that connects with working men and women.”

Eight weeks ago it seemed all but certain tronc would take over the Sun-Times in a move that many believed would have stifled competition and led to the inevitable demise of the city’s No. 2 newspaper. All that stood in the way of the deal was the vigilance of the U.S. Department of Justice Antitrust Division.

Alone in answering the Justice Department’s call for alternative bidders was Eisendrath, backed by the Chicago Federation of Labor and a belief that the Sun-Times was too vital to the life of the city to forfeit its independence.

My guess is that the (probably pre-Trump) DoJ call for bidders had a lot to do with Tronc losing the bid, because it implied a lot of litigation if the two big Chicago papers merged.

I’d like to see more official moves against consolidation.

Quote of the Day

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And so, contrary to Hayek’s expectations, financial globalisation has proved that it is market fundamentalism, and not the regulatory state that is leading the world into an era of authoritarianism and totalitarianism – in the US, Eastern Europe, India and China.

—Ann Pettifor

This is not surprising the relentless concentration of power by monopolists has always had this effect. 

As an aside, Hayek in fact loved authoritarianism and totalitarianism, as shown by his full-throated support of the brutal Pinochet regime in Chile, and his only slightly more muted defense of the Apartheid regime in South Africa.