Trump's AG pick has pushed for, against big telecom deals for corporate employers
10 January 2019. By Jenna Ebersole.
President Donald Trump’s choice for his next attorney general, William Barr, has a track record of high-profile advocacy both for and against major telecommunications deals based on the interests of his corporate employers.
Barr, who could take the helm at the Justice Department while T-Mobile and Sprint’s proposed merger is pending, was involved in several transactions as general counsel at GTE and its successor Verizon between 1994 and 2008. The work followed Barr’s previous stint as President George H.W. Bush’s attorney general.
Barr’s appointment is not seen as likely to mark a major shift in antitrust enforcement under President Trump given that attorneys general are typically fairly removed from the department’s caseload. Still, they may involve themselves more in areas where they have past experience.
In one landmark deal, Barr played a prominent role for GTE in its strident opposition to the $44 billion WorldCom-MCI Communications merger in the late 1990s after the company’s own bid for MCI failed.
The DOJ cleared the transaction in 1998 with the divestiture of MCI’s Internet business. The $1.75 billion divestiture was the largest of a company in merger history, the DOJ said at the time.
The outcome followed a lengthy investigation on both sides of the Atlantic. According to his Senate questionnaire, Barr developed and brought an antitrust challenge to the deal in Europe.
“I presented and argued the case before a competition panel of the European Commission, successfully obtaining the relief sought — divestiture of certain internet backbone assets,” he said.
GTE also filed suit in the US against the transaction, according to contemporaneous news reports submitted to the Senate. The reports quote Barr extensively in his criticism of the deal.
In 1998, he told the Washington Post the merger would create "a very unstable market structure that will lead to dominance and monopolization.”
"If this merger goes through, MCI-WorldCom will dictate the terms" for others seeking Internet access, he warned.
Earlier — in October 1997 — Barr and a WorldCom attorney held dueling press conferences on their companies’ bids for MCI, according to an Aspen Publishers report.
Barr said a GTE-MCI deal would involve almost no product line overlap and create a vertically integrated, all-services provider.
By contrast, he said the WorldCom-MCI transaction was “largely horizontal.” The deal would involve “an amalgamation of two former competitors,” Barr said, and combine the second- and fourth-largest facilities-based competitive carriers and the top two biggest backbone data network providers.
The former attorney general also fought successfully for four major transactions he listed in his Senate paperwork: GTE’s $616 million purchase of BBN Technologies; the $64 billion Bell Atlantic-GTE merger that formed Verizon; Verizon’s $8.5 billion purchase of MCI in 2006; and the $28 billion Verizon-Alltel deal in 2007.
During review of the Bell Atlantic deal, Barr said he served as GTE’s lead antitrust counsel at the DOJ and US Federal Communications Commission. The DOJ in 1999 cleared the deal and a Bell Atlantic partnership agreement with Vodafone with the divestiture of wireless businesses.
Much more recently, Barr also waded into a merger dispute while affiliated with a private corporation when he filed a declaration in the AT&T-Time Warner case as a member of the Time Warner board.
Barr sat in on a November 2017 meeting with DOJ antitrust leaders and Time Warner executives shortly before the DOJ sued to block the deal. In his declaration, he said descriptions of the meeting filed by antitrust chief Makan Delrahim and his deputy Andrew Finch were “inaccurate and incomplete.”
According to his declaration, Barr said at the meeting the division’s theory of harm in the case was inconsistent with decades of settled antitrust law and the DOJ’s merger guidelines, and questioned whether Delrahim’s position was politically motivated.
It isn’t clear how the incident could affect Barr’s interaction with the division, if at all, but the declaration aligns with his history of strong advocacy for corporations and their deals since he left the DOJ.
At a 1999 congressional hearing, Barr addressed major telecom mergers at the time and offered his view of consolidation. He said the purpose of the 1996 Telecommunications Act was to promote some degree of consolidation in moving away from a siloed telecom industry.
“The problem will occur where mergers tend to bring together competing entities, existing competitors, and therefore diminish competition in some markets,” he said. “But I wouldn’t say generally that all mergers are bad. And you have to look at each merger as they come to see what its competitive impact is.”