Communications attorney Jonathan Lee thinks the Department of Justice got it all wrong in its suit against DirecTV and parent AT&T for allegedly sharing deal information with competitors in contract negotiations for SportsNet LA and Los Angeles Dodgers baseball. DirecTV did not wind up carrying the channel, saying it was too expensive.
In a blog post Friday—"Why Is DoJ Siding Against Consumers in its DirecTV Complaint?"—Lee pointed out that DOJ's claim of "conspiracy in restraint of trade" was based on DirecTV telling Cox and Charter privately what its chairman was saying publicly—that the company was not going to pay Time Warner Cable's "ridiculous demand" of $5 per sub—TWC had paid billions for the rights to Dodgers baseball, Lee pointed out, which it then needed to recoup in fees from distributors.
He said that what DOJ didn't seem to recognize was that at the same time DirecTV was saying it wasn't paying, it was a defendant in class action suits alleging that similar contracts to the one TWC had struck with the Dodgers were restraints of trade that raised prices for no countervailing benefit.
In those suits, "the federal district court for the Southern District of New York repeatedly held—in pretrial motion practice—that these 'geographic exclusive' contracts were agreements that restricted output, raised prices, and resulted in less consumer choice."
"Thus, throughout the relevant time period, DirecTV knew that the types of contracts that MLB teams/leagues use to extract ever higher prices from consumers were considered 'restraints of trade' and needed to show a countervailing consumer benefit in order to NOT violate the antitrust laws."
"How ironic, then, that when DirecTV sees an egregiously anti-consumer version of one of these contracts—and decides that it does not want to be a party to it (information that it shares with the world and its competitors)—the DoJ alleges that THIS is the behavior the antitrust laws were written to prohibit (i.e., not passing along a huge, anticompetitive, consumer price increase)!"
Lee has a private consulting practice and is a former antitrust staffer at DOJ.
