November 30, 2011 10:47 AMOrder Dismissing the Applications of AT&T and Deutsche Telecom for license transfers. This was not unusual. The way the Commission did it, and the drama leading up to yesterday's events was.
As AT&T's Jim Cicconi succinctly and thoroughly notes in a blog post yesterday, the Commission's action was the only legally correct response to AT&T and DT's request to withdraw their license transfer applications. So far, so good, but then the FCC decided to include a 109 page document entitled "Staff Analysis and Findings", which is primarily FCC staff's attempt to analyze the merger under Section 7 of the Clayton Act (the subject of pending litigation by the agency charged with enforcing Section 7 of the Clayton Act in a venue authorized to decide challenges brought under that statute) This is where it gets interesting.
Yesterday's action--the appending of the "Staff Analysis and Findings" to the Dismissal Order--was interesting, not only because it was unusual and unnecessary to accompany an order terminating an FCC matter, but because the Commission seemed so intent on releasing its own primarily antitrust analysis, when the parties are already engaged in active antitrust litigation in a court with the jurisdiction to decide antitrust claims.
While the Commission attempts to offer some superficially unpersuasive justifications in paragraph 8 of its order, these justifications are laughable. For example, they note that "a lot of people spent a lot of time on this"--in what large matter do they not? The Commission also argues that releasing the document "furthers transparency"--this is the one that is laughable. The Commission never releases pre-decisional, deliberative documents. In fact, there is a Freedom of Information Act exception that allows agencies to withhold exactly this information.
Finally, the FCC notes that "the parties could still re-file." But, doesn't this argue for just holding on to the original draft order? Far from persuading, the order's empty reasoning leaves the reader with the question of "why did the Commission really bother?"
Personally, when I heard the Commission planned to release a report containing the "Commission staff's" opinions (that were allegedly the basis of the draft designation order) along with an order approving the parties' withdrawal of their applications, my reaction was that the agency was engaging in a distasteful, rude, and uncivil disregard for the legal process. After all, the proper authorities were already well engaged in antitrust litigation with the parties before a U.S. District Court.
You would hope that the FCC would show some respect for the rule of law, and the responsibilities of the judiciary, and simply take the action they were legally bound to take--dismissing the license transfers. But instead, the FCC displayed a relative contempt for the law.
The Commission certainly understood that it was extinguishing its own jurisdiction over the applications it was dismissing. So, what purpose did the Commission have that was so important that would cause it to include--in a dismissal order--its own, non-expert, antitrust analysis that was admittedly not based on solid evidence (which is why the FCC wanted to refer the matter to an ALJ)?
It's hard to believe that the Commission wasn't aware that it would at least create the perception that it was attempting to exert some extra-legal influence over the pending antitrust litigation. Thus, my initial reaction--when I heard what the Commission planned to do--was one of disappointment at the agency's disregard (if not contempt) for the integrity of the court proceeding.
I spoke to a reporter last night who had talked to a lot of other attorneys. The reporter wanted to get my "take" on the Commission's action--which I just described. The reporter told me that I was the only person that had expressed this opinion. It turns out that most people were focused on the substance of the staff report, and what (generally negative) effect this report would have on AT&T's prospects for its antitrust litigation.
Many people opining on the matter claimed to be under the impression that the FCC was asked to release its report at the request of the Antitrust Division. Personally, I don't believe this to be true, because it just sounds silly on its face. The basis of this report was a draft order, prepared by Commission staff for the Commission's own internal purposes. The "draft order" was clearly converted to a "staff report and analysis" in an awfully short period of time, and this is what makes the "Antitrust Division request" theory all the more incredible.
First, what Antitrust Division attorney, working on their own case, would want to be stuck with a report, analysis, and support prepared by FCC staff, and released under a cloud of bias? It makes no sense. FCC staff did not write the Division's complaint, FCC staff have not reviewed the same evidence as the Division staff, so it is more likely that the FCC staff report would lock the Division into a weaker case than the Division should be able to make for itself.
Second, why would the Antitrust Division want its case, including supporting materials, laid out for AT&T's inspection for a full two and a half months prior to trial? What attorney would be comfortable with this arrangement?
Third, whether the DoJ asked for it or not, they now have to deal with the prospect of bias in the eyes of the court. Even though the defendant is a big company, courts are mindful of fairness. Any contradictory inconsistency between the Division's actual case and the staff report will be the government's burden to reconcile and justify.
To What End?
There is no good answer for why the FCC included its report in its dismissal order. By showing bias at this point, can the FCC really re-claim the mantle of the "public interest?" If the case settles, or the parties win the litigation, can the FCC do anything more than process and approve a new application?