Monday, July 14, 2003

Antitrust News: DOJ Speaks on Voice Case

On June 24, I filed a motion to intervene in the federal antitrust case against Village Voice and NT Media for purposes of appealing the settlement forced on the two media companies by the Justice Department. On July 10, the government filed its brief in opposition to my motion.

Because this matter is still pending before the district court, I won't offer extended commentary on the government's position right now, but I will comment on one argument raised by the DOJ. One of my key contentions is that in requiring Village Voice and NT Media to divest assets to third parties before the expiration of the public comment period, the government effectively violated the Tunney Act, since the public and the district court were denied a "meaningful" opportunity to review the settlement. This is purportedly the main reason Congress passed the Tunney Act—avoiding judicial rubber stamping of antitrust settlements—so it's hard to see how Congress would approve of irrevocably altering the status quo to carry out the principal terms of a settlement before the Court can review said terms.

The DOJ's only answer to me is that they needed to act quickly to "restore competiton." But as I've pointed out (twice) now, the Tunney Act provides a mechanism for shortening the review period if extraordinary circumstances warrant. The DOJ never opted to use this mechanism, yet insists the situation was dire. But there's no argument or evidence that demonstrates why "consumers" would not have benefitted had the government waited until the court completed its review of the settlement. We're only talking a period of a few weeks—does the market for "alternative newsweeklies" really evolve that quickly? Doubtful.

In a footnote, the DOJ tries to turn my argument against me, without success:
Moreover, if one adopted the Movant's interpretation of the Tunney Act, it would compromise the usefulness of the consent decree as a viable settlement option in other antitrust contexts. As the United States explained in its Response to Public Comments, it is customary in other Tunney Act proceedings that involve mergers to permit the defendants to merge after the complaint and proposed final judgment are filed, subject to the defendants' obligations under the proposed final judgment to take steps to divest certain specified assets. In these mergers, the defendants are generally allowed to complete the merger prior to the close of the sixty-day comment period and entry of the final judgment by the court.
I assume this is an effort to catch me in a trap: Since I presumably want mergers to go forward (as a capitalist opposed to antitrust), I would not want to force merging firms to hold up consummating their deals longer than necessary. It's a nice try, but the principle here remains constant despite the particulars: If a court has Tunney Act jurisdiction to review a merger settlement, does it not prejudice that court's powers to permit the merger to proceed prior to judicial review? What if the court decides the settlement is weak and the merger should not be permitted to proceed? It's very hard to unscramble the eggs, so to speak, after the fact. Congress presumably wanted to avoid this when they required a statutory public comment period in the first place. But the DOJ views legal deadlines as inconvenient challenged to their unlimited antitrust powers.

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