Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Justice Department stands by proposal to settle Charter-TWC-BHN antitrust complaint, (Aug 17, 2016)

By Lynn Stanton,TR Daily

The Justice Department said yesterday that after consideration of the single public comment filed on its proposed final judgment in its antitrust lawsuit seeking conditions on Charter Communications, Inc.’s proposed acquisition of Time Warner Cable, Inc., and Bright House Networks, it "continues to believe that the proposed Final Judgment provides an effective and appropriate remedy for the antitrust violations alleged in the Complaint."

The proposed final judgment unveiled last spring seeks conditions to bar the combined company from agreeing to programming contract provisions that would restrict program access by online video distributors (OVD) and to prohibit post-merger Charter from availing itself of other distributors’ "most favored nation" contract provisions if those provisions are inconsistent with the bar on restricting OVDs’ access to video content .

In its response to the public comment filed with the U.S. District Court for the District of Columbia in U.S. v. Charter Communications, Inc., Civil Action 1:16-cv-00759, the Justice Department said it would file a motion with the court for approval of the proposed final judgment after the public comment and response are published in the Federal Register.

The commenter, Amy Bloomfield of Siler City, N.C., criticized the Justice Department for "pretty much keeping this 60-day opportunity for the public to sound off a secret. I almost couldn't find mention of it, with the pertinent dates, during repeated ‘googlings.’" She said that "Charter is one of the worst companies I know," saying that the company is "too damned cheap" to fix "something [that] broke" on the pole closest to her home, and instead runs its wires to a pole "that is simply too far away from my home to maintain signal integrity."

She also criticized Charter for sending contractors on service calls who "don’t speak English; show up looking like bums from a corner bar, with NO Charter ID on themselves or on their dirty beat-up trucks." Several of these contractors "have told me that they receive NO training for what they do," Ms. Bloomfield added.

"So PLEASE, before you assume that Charter can and will provide acceptable service to new customers, investigate this wretched company for contract labor violations, consumer rip-offs, etc. Please hold them accountable," she added.

In its response, the Justice Department said, "The United States appreciates receiving Ms. Bloomfield’s comment. Over the course of its ten-month investigation, the United States carefully considered the competitive effects of Charter’s proposed acquisitions of TWC and BHN, including any possible effects on customer service. As a result of its investigation, the United States concluded that these acquisitions were likely to reduce competition only insofar as they increased the incentive and ability of Charter to foreclose competition from nascent online video providers. Therefore, the Department’s Complaint only addressed that issue. It is well-settled that comments, such as Ms. Bloomfield’s comment, that are unrelated to the concerns identified in the complaint are beyond the scope of this Court’s Tunney Act review."

As for its proposed final judgment, the Justice Department said that it is "designed to address the anticompetitive effects identified in the Complaint by prohibiting Charter from entering into or enforcing certain restrictive contract provisions that may be likely to substantially lessen competition. In addition, Charter is prohibited from retaliating against video programmers for licensing content to online providers that compete with Charter. Charter is also required to provide certain regular reports to the Department, so that the Department can monitor whether a separate remedy imposed by the Federal Communications Commission is successfully preventing Charter from using its bargaining leverage over internet interconnection to harm online video providers."

The FCC voted to approve the Charter-TW-BHN transactions last spring, subject to conditions that include settlement-free interconnection and related disclosure requirements; a prohibition on data caps or usage-based pricing for residential broadband Internet access service (BIAS); provisioning and technical service support for CableCARDs; a seven-year prohibition on the use or enforcement of programming contract provisions that inhibit distribution of content online; a BIAS build-out commitment to 2 million more residences of service capable of providing at least a 60 megabits per second download speed; the offering of "an affordable, low-price standalone broadband service to certain low-income consumers in the combined entity’s footprint"; submission of a plan for managing cybersecurity risks during the transition period as the pre-merger entities’ operational systems are combined; and a requirement to "retain both an internal company compliance officer and an independent, external compliance officer that will report and monitor, respectively, the combined entity’s compliance in accordance with the terms of this Order."

Companies: Charter Communications Inc.; Bright House Networks LLC; Time Warner Cable Inc.

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