Comcast, DoJ May Revisit Part of Consent Decree After Rare Rebuke From Judge
Comcast and the Justice Department may revisit terms of a consent decree clearing the cable operator’s multi-billion-dollar purchase of NBCUniversal (WID Jan 19 p2) after a judge who must approve the settlement expressed concerns, antitrust lawyers predicted. Judge Richard Leon of U.S. District Court in Washington, in a fairness hearing Wednesday afternoon, criticized an arbitration clause in the antitrust pact for online video distributors (OVD), The Wall Street Journal reported. Such rebukes are extremely rare, and all antitrust lawyers we interviewed said they couldn’t recall a single instance where that happened in such a hearing. Comcast and Bloomberg, meanwhile, continued to trade filings at the FCC on the first company’s adherence to one of the agency’s deal conditions.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Comcast and Justice can either redo the arbitration provision in the consent decree and then likely get Leon’s okay, or go back to court to try to argue it shouldn’t be changed, said antitrust lawyers who watched the Comcast-NBCUniversal deal. The latter approach might further raise his ire, they said. Spokeswomen for Comcast and DOJ had no comment. The court reporter who works for Leon said the transcript of the hearing won’t be available until next week.
Judges can decide not to approve a consent decree, and the last time that happened in a high-profile case was in 1994 when Judge Stanley Sporkin of the same court in Washington rejected a DOJ settlement with Microsoft, said antitrust specialists. None could recall any instance when a judge wouldn’t sign off on a consent decree in an acquisition, as Leon reportedly said he was considering. They said that’s probably because Sporkin was reversed by the U.S. Court of Appeals for the D.C. Circuit. “There have been a few instances, one being the Microsoft antitrust case,” said Professor Andrew Gavil of Howard University of consent decree rejections: “And that’s partly why it doesn’t happen very often,” because the D.C. Circuit reversed Sporkin.
Fairness hearings where a jurist hears about the consent decree usually are a pro forma affair, with the government granted great latitude to demonstrate it should be approved, said communications and antitrust lawyers. “The noise in the fairness hearing is not irrelevant, and it actually is significant,” said Gavil. “The judge sort of communicates his discomfort with some provision, and by essence in doing that he’s inviting the parties to fix it,” he continued. “It’s rare that the parties call the court’s bluff, just as it’s rare for a court to throw out the settlement.” Leon is “in essence inviting the parties to make him more comfortable by revising the settlement,” Gavil added.
Comcast and Justice likely will be amenable to changing the consent decree, if that’s what it takes to get Leon’s approval, said an antitrust lawyer who represents companies in other cases. “I can’t believe that they'd insist on their version, if the arbitration appealability was his only sticking point.” The American Antitrust Institute was the sole entity to express concerns about the OVD arbitration terms, according to a filing last month by the U.S. It responded to public comments on the settlement.
If Comcast/NBCUniversal and an OVD can’t reach a deal for the combined company to license its broadcast, cable or film content for distribution, the OVD can ask Justice to submit the dispute to an arbitrator. The arbitrator would engage in “baseball-style arbitration,” where each side makes their best offer and the referee picks one, the U.S. filing to Leon said. The court under the Tunney Act has a role that’s “limited to reviewing the remedy in relationship to the violations that the United States has alleged in its complaint, rather than to” build its own case, the government said. It cited the D.C. Circuit’s Microsoft decision from 1995. In 2004 amendments to the act, the U.S. said that “Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement.”