[Federal Register Volume 81, Number 163 (Tuesday, August 23, 2016)]
[Notices]
[Pages 57617-57620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20066]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States of America v. Charter Communications, Inc., et al.; 
Public Comment and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comment 
received on the proposed Final Judgment in United States of America v. 
Charter Communications, Inc., et al., Civil Action No. 1:16-cv-00759, 
together with the Response of the United States to Public Comment.
    Copies of the comment and the United States' Response are available 
for inspection on the Antitrust Division's Web site at http://www.justice.gov/atr, and at the Office of the Clerk of the United 
States District Court for the District of Columbia. Copies of these 
materials may be obtained from the Antitrust Division upon request and 
payment of the copying fee set by Department of Justice regulations.

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Charter Communications, 
Inc., Time Warner Cable Inc, Advance/Newhouse Partnership, and 
Bright House Networks, LLC, Defendants.

Civil Action No. 1:16-cv-00759 (RCL)

RESPONSE OF PLANTIFF UNITED STATES TO PUBLIC COMMENT ON THE PROPOSED 
FINAL JUDGMENT

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the 
United States hereby files the single public comment received 
concerning the proposed Final Judgment in this case and the United 
States's response to the comment. After careful consideration of the 
submitted comment, the United States continues to believe that the 
proposed Final Judgment provides an effective and appropriate remedy 
for the antitrust violations alleged in the Complaint. The United 
States will move the Court for entry of the proposed Final Judgment 
after the public comment and this Response have been published in the 
Federal Register pursuant to 15 U.S.C. 16(d).

I. PROCEDURAL HISTORY

    On May 23, 2015, Charter Communications, Inc. (``Charter'') and 
Time Warner Cable, Inc. (``TWC''), two of the largest cable companies 
in the United States, agreed to merge in a deal valued at over $78 
billion. In addition, Charter and Advance/Newhouse Partnership, which 
owns Bright House Networks, LLC (``BHN''), announced that Charter would 
acquire BHN for $10.4 billion, conditional on the sale of TWC to 
Charter. On April 25, 2015, the United States filed a civil antitrust 
Complaint seeking to enjoin Charter from acquiring TWC and BHN. The 
United States alleged in the Complaint that the proposed acquisition 
likely would substantially lessen `competition in numerous local 
markets for the timely distribution of professional, full-length video 
programming to residential customers (``video programming 
distribution'') throughout the United States in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18.
    Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment that would settle the case. On May 10, 
2016, the United States filed a Competitive Impact Statement (``CIS'') 
that explains how the proposed Final Judgment is designed to remedy the 
likely anticompetitive effects of the proposed acquisition. As required 
by the Tunney Act, the United States published the proposed Final 
Judgment and CIS in the Federal Register on May 17, 2016. See 81 FR 
30550. In addition, the United States ensured that a summary of the 
terms of the proposed Final Judgment and CIS, together with directions 
for the submission of written comments, were published in The 
Washington Post for seven days from May 13 through 19, 2016. The 60-day 
period for public comments ended on July 18, 2016. The United States 
received one comment, which is described below and attached as Exhibit 
1.

II. THE INVESTIGATION AND THE PROPOSED SETTLEMENT

    The proposed Final Judgment is the culmination of more than ten 
months of investigation by the Antitrust Division of the United States 
Department of Justice (``Department''). The Department opened an 
investigation soon after the transactions were announced, and conducted 
a comprehensive review of the potential implications of the 
transactions. The Department interviewed dozens of companies and 
individuals involved in the industry, obtained deposition testimony, 
required Defendants to provide the Department with extensive data and 
responses to numerous interrogatories, and collected millions of 
business documents from the Defendants and relevant third parties. The 
Department also consulted extensively with the Federal Communications 
Commission, which was conducting a separate statutory review of the 
acquisitions, to ensure that the agencies conducted their reviews in a 
coordinated and complementary fashion and created remedies that were 
both comprehensive and consistent.
    Although Charter, TWC, and BHN do not compete to offer residential 
services in the same local geographic areas, the Department's 
investigation found that the proposed acquisitions were likely to 
substantially lessen competition because they would increase Charter's 
incentive and ability to use its bargaining leverage to make it more 
difficult for online video distributors to compete effectively. In 
particular, the Department alleged in its Complaint that the merger 
would give Charter greater incentive and ability to use restrictive 
clauses in its contracts with video programmers to prevent online video 
distributors from obtaining important video programming content.
    The proposed Final Judgment is designed to address the 
anticompetitive

[[Page 57618]]

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.

III. STANDARD OF JUDICIAL REVIEW

    The Tunney Act requires that proposed consent judgments in 
antitrust cases brought by the United States be subject to a 60-day 
public comment period, after which the court shall determine whether 
entry of the proposed Final Judgment ``is in the public interest.'' 15 
U.S.C. 16(e)(1). In making that determination, the court, in accordance 
with the statute as amended in 2004, is required to consider:
    (A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.

    15 U.S.C. 16(e)(1). In considering these statutory factors, the 
court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see also United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1, 10-11 (D.D.C. 2007) (assessing 
public interest standard under the Tunney Act); United States v. InBev 
N.V./S.A., No. 08-cv-1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 
(D.D.C. Aug. 11, 2009) (discussing nature of review of consent judgment 
under the Tunney Act; inquiry is limited to ``whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanisms to enforce the final judgment are clear and manageable'').
    Under the APPA, a court considers, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the Complaint, whether the decree is sufficiently clear, 
whether the enforcement mechanisms are sufficient, and whether the 
decree may positively harm third parties. See Microsoft, 56 F.3d at 
1458-62. With respect to the adequacy of the relief secured by the 
decree, a court may not ``engage in an unrestricted evaluation of what 
relief would best serve the public.'' United States v. BNS, Inc., 858 
F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel Corp., 
648 F.2d 660, 666 (9th Cir. 1981)). Instead, courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement in ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).
    In determining whether a proposed settlement is in the public 
interest, ``the court `must accord deference to the government's 
predictions about the efficacy of its remedies.' '' United States v. 
U.S. Airways Grp., Inc., 38 F. Supp. 3d 69, 76 (D.D.C. 2014) (quoting 
SBC Commc'ns, 489 F. Supp. at 17). See also Microsoft, 56 F.3d at 1461 
(noting that the government is entitled to deference as to its 
``predictions as to the effect of the proposed remedies''); United 
States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 
2003) (noting that the court should grant due respect to the United 
States' ``prediction as to the effect of the proposed remedies, its 
perception of the market structure, and its views of the nature of the 
case''); United States v. Morgan Stanley, 881 F. Supp. 2d 563, 567-68 
(S.D.N.Y. 2012) (explaining that the government is entitled to 
deference in choice of remedies).
    Courts ``may not require that the remedies perfectly match the 
alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d at 17. Rather, the 
ultimate question is whether ``the remedies [obtained in the decree 
are] so inconsonant with the allegations charged as to fall outside of 
the `reaches of the public interest.' '' Microsoft, 56 F.3d at 1461. 
Accordingly, the United States ``need only provide a factual basis for 
concluding that the settlements are reasonably adequate remedies for 
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17; see also 
United States v. Apple, Inc. 889 F. Supp. 2d 623, 631 (S.D.N.Y. 2012). 
And, a ``proposed decree must be approved even if it falls short of the 
remedy the court would impose on its own, as long as it falls within 
the range of acceptability or is within the reaches of the public 
interest.'' United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 
(D.D.C. 1982) (citations and internal quotations omitted); see also 
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 
1985) (approving the consent decree even though the court would have 
imposed a greater remedy).
    In its 2004 amendments to the Tunney Act,\1\ Congress made clear 
its intent to preserve the practical benefits of using consent decrees 
in antitrust enforcement, adding the unambiguous instruction that 
``[n]othing in this section shall be construed to require the court to 
conduct an evidentiary hearing or to require the court to permit anyone 
to intervene.'' 15 U.S.C. 16(e)(2). The procedure for the public 
interest determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of the Tunney Act proceedings.'' 
SBC Commc'ns, 489 F. Supp. 2d at 11; see also United States v. Enova 
Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) (``[T]he Tunney Act 
expressly allows the court to make its public interest determination on 
the basis of the competitive impact statement and response to public 
comments alone.''); US Airways, 38 F. Supp. 3d at 76 (same).
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    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).

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[[Page 57619]]

IV. Summary of Public Comment and Response of the United States

    During the 60-day comment period, the United States received one 
comment from Amy R. Bloomfield, a Charter customer in North Carolina. 
Ms. Bloomfield generally describes her poor experience as a Charter 
customer. Ms. Bloomfield opposes the merger because ``Time Warner 
[Cable] is a decent company; Charter is not.''
    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. See, e.g., SBC Commc'ns, 489 F. Supp. 2d at 
14 (holding that ``a district court is not permitted to `reach beyond 
the complaint to evaluate claims that the government did not make and 
to inquire as to why they were not made' '') (quoting Microsoft, 56 
F.3d at 1459) (emphasis in original); see also US Airways, 38 F. Supp. 
3d at 76. Accordingly, Ms. Bloomfield's comment does not provide a 
basis for rejecting the proposed Final Judgment.

V. Conclusion

    After reviewing the public comment, the United States continues to 
believe that the proposed Final Judgment, as drafted, provides an 
effective and appropriate remedy for the antitrust violations alleged 
in the Complaint, and is therefore in the public interest. The United 
States will move this Court to enter the proposed Final Judgment after 
the comment and this response are published in the Federal Register.

Dated: August 16, 2016.

Respectfully submitted,

/s/--------------------------------------------------------------------
Robert Lepore,
United States Department of Justice, Antitrust Division, 450 Fifth 
Street NW., Suite 7000, Washington, DC 20530, Tel.: (202) 532-4928, 
Email: [email protected].
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