How AT & T beat the government

On the second day of hearings on

AT & T

T 1.94%

offer to buy Time Warner Inc., lead defense attorney

Daniel Petrocelli

He refuted a Justice Department attorney who mentioned his long experience in litigating corporate competition matters.

Unlike his opponent, "who has tried many, many antitrust cases, and I admire him, I have tried with a total of zero," Petrocelli said. "But I've been on the block a couple of times."

U.S. District Judge

Richard Leon,

who would decide the outcome of the case, joked that he would make a judicial note of it.

The exchange presaged a hallmark of the ultimately successful defense of the companies, which relied on simplicity and aggressive interrogation.

That strategy helped cast doubt on the Justice Department's allegation that the combination of AT & T's distribution network and popular Time Warner channels would lead to higher pay-TV prices.

Judge Leon rejected the government's badertions to close a transaction of approximately $ 81 billion after almost two years of waiting.

The judge wrote in a 172-page opinion drafted harshly that the plaintiffs had not complied with their burden of proof. Mr. Petrocelli is a trial lawyer best known for representing celebrities. His high-profile corporate badignment came just after another politically charged affair: he represented the president

Donald Trump

in a lawsuit for collective fraud against Trump University that ended up being resolved, but not before Mr. Trump accused the judge of being biased because of his Latino heritage.

Mr. Petrocelli was backed in the case of AT & T by a horde of antitrust experts and other specialists. But he handled most of the testimonies, often attacking government witnesses to strip them of their credibility.

"He does not know without looking at the document, right?" He once asked the University of California, Berkeley professor.

Carl Shapiro,

the government's main economic witness, referring to the data in its report on leveraging in pay-TV negotiations.

Mr. Shapiro seemed annoyed and congratulated Mr. Petrocelli for his "style" in choosing a detail from a long report. "You have me in that," he said. "I did not catch you," Mr. Petrocelli replied. "You have it".

The Justice Department won some evidentiary skirmishes, admitting often embarrbading internal AT & T documents into the registry. But AT & T lawyers often spent more time attacking opposing witnesses than defending themselves against the content of the documents.

When Mr. Petrocelli sweated the details, he used to demand some evidence to corroborate a government witness, and then attack that expert or executive for not producing it.

The company's lawyers also fought to keep the testimony of rivals AT & T and its DirecTV satellite unit public. Cable and satellite provider attorneys such as

Charter Communications


, Cox and

Dish Network

irritated by discussing sensitive negotiations in public.

But the defense lawyers wanted them to be observed, according to a member of Mr. Petrocelli's team, thinking they would be less likely to warn that AT & T could kill their businesses if their own investors were aware of the testimony.

The gambit worked. Mr. Petrocelli attacked the executives of Cox and Dish on the witness stand, and Comcast, the owner of NBCUniversal's media badets, did not give the government convincing testimony.

Judge Leon said on Tuesday that his testimony was of "limited probative value."

"AT & T did pretty much everything right, and the Justice Department did everything wrong," he said.

Nicholas Economides,

a professor of economics at the Stern School of Business at New York University who saw part of the essay.

Mr. Economides said he saw the odds of the case even when it started, but said those probabilities changed as the trial progressed. He said the government presented a complicated theory "and its exposure was relatively poor".

Justice Department attorneys often disagreed with the way the companies defended their case and accused their lawyers in a post-trial report of "making a mockery of the judicial system."

Makan Delrahim,

The department's antitrust chief said in an interview after a public presentation in New York on Wednesday that he did not know whether the agency would appeal the decision.

"I agree with that? No, but if I had to face the same facts, cases and economy, would I bring it back? Yes," he said. "I do not think our case or evidence or theories were flawed," said Delrahim.

-Brent Kendall contributed to this article.

Write to Drew FitzGerald at [email protected] and Sarah Krouse at [email protected]


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