Litigator of the Week: An Antitrust Win for the History Books
Daniel Petrocelli is not an antitrust expert—but the O'Melveny & Myers partner didn't need to be in order to win the biggest merger challenge in decades.
June 15, 2018 at 11:30 AM
5 minute read
Instead, the self-proclaimed generalist relied on his tried and true skills as a litigator to convince U.S. District Senior Judge Richard Leon to approve the $85 billion union of AT&T and Time Warner without conditions, handing the Justice Department's Antitrust Division a rare courtroom defeat. The impact was almost instantaneous: Comcast on Wednesday made a $65 billion offer for 21st Century Fox, and analysts expect a wave of additional mergers to follow. To be sure, Petrocelli didn't win it alone. A stunning 140 lawyers and staff from O'Melveny worked on the case, with Randy Oppenheimer, who co-chairs the firm's litigation department, and antitrust partner Katrina Robson playing leading roles. Gibson, Dunn & Crutcher's Rob Walters and Mike Raiff were co-counsel. They teamed up with Time Warner lawyers from Cravath, Swaine & Moore including Peter Barbur, Julie North, Kevin Orsini, Margaret Segall D'Amico and Christine Varney. “It was a fabulous experience working with so many terrific lawyers and law firms, and I was just one part of it,” Petrocelli said in an interview. “It was a 24/7 experience,” he continued. “It was very intense because of the magnitude and importance of the case. The part that stands out the most, for me, is … the ability to embed yourself with a group of other people, from fellow partners to associates, to all the staff people who were working and supporting the effort. [We're] all working at a trial site, all consumed by the work. Eating together every day, going out for a drink whenever you can, finding a spare moment but always talking about the case, thinking about the case, just consumed by the case.” That dedication paid off. In a 172-page opinion , Leon concluded that “the government has failed to meet its burden to establish that the proposed 'transaction is likely to lessen competition substantially.'” The DOJ antitrust team, led by longtime career attorney Craig Conrath, argued that the deal would allow AT&T to use Time Warner's “must-have” programming such as CNN, TNT and TBS to extract higher prices from AT&T's rival distributors. “[T] hose higher costs will, in turn, be passed on to consumers,” he wrote in a pretrial brief. Leon didn't buy it, noting that government was in uncharted territory. “[T]he court unfortunately does not have the luxury of looking to judicial precedents,” Leon wrote. “Indeed, the government has not pointed to any prior trials in federal district court in which the Antitrust Division has successfully used this increased-leverage theory to block a proposed vertical merger.” In that sense, Petrocelli had an easier job making his case than his opponents at the DOJ—which last challenged a vertical merger in the Carter administration. Given the Trump administration's overall deregulatory agenda, it was surprising that DOJ would pursue such an aggressive theory in opposing the transaction. Many speculated that President Donald Trump wanted the deal blocked based on his dislike of CNN's news coverage. But in pre-trial orders, Leon shut down this line of inquiry, and Petrocelli (who represented the president in the Trump University suit) declined to weigh in on it as well. “The court was very focused on trying this case on the merits—that's how it was tried and decided,” was all he would say. In fact, there was no need for AT&T and Time Warner to argue the president improperly influenced the case. They won handily by stressing that the merger was all about “making Time Warner and AT&T more competitive during a revolutionary transformation that is occurring in the video programming marketplace,” pointing to the rise of Netflix, Amazon, Google and other direct-to-consumer companies that provide video programming and distribution. While this was Petrocelli's first antitrust trial involving a merger (though not his first antitrust trial ever—in 2001, he defended Barnes & Noble in a Robinson-Patman suit by independent bookstores), he noted that “the cases all come down to the unique facts of the specific merger.” He continued, “That was a very comfortable place to be in, putting the case together and presenting it in court guided by the antitrust principles of law, which were not controversial at all. No novel legal propositions, it was just fact-based. And it's bringing witnesses, presenting evidence, something we trial lawyers do all the time. So in that sense it was business as usual.” As for how he got up to speed on the subject area, he said there was “no secret sauce”—just straightforward preparation by reading key cases and talking to experts. “You're never going to be as expert as someone who practices all the time, but rarely is that degree of expertise necessary to try a case,” Petrocelli said. “Because at the end of the day you're trying to communicate basic ideas to give the audience who—it might be judges or juries themselves—are not experts in the area. So it's not just about learning an area of law but being able to communicate it in way that's persuasive.”
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