US. Department of Justice Antitrust Division Freedom of Information Act Privacy Act Unit Liberty Square Buiiding 450 5th Street, NW, Suite 1000 Washington, DC. 20530 Voice: (202) 514-2692 /Fax: (202) 616-4529 August 15, 2017 BY EMAI Austin R. Evers Executive Director American Oversight 1030 15th Street, NW, Suite B255 Washington, DC 20005 Re: Freedom of Information Act Request No. 11 Dear Mr. Evers: This letter responds to your July 7, 2017 Freedom of Information Act request for the following: 1. All communications between (1) employees in the Of?ce of the Attorney General, the Of?ce of the Deputy Attorney General, the Of?ce of the Associate Attorney General, or the Antitrust Division of DOJ (including the Of?ce of the Assistant Attorney General) and (2) employees of the White House regarding the Time Warner-AT&T merger, review of that proposed merger, coverage of the administration, or Jeff Zucker. . .. from January 20, 2017, to the date the search is conducted. 2. All communications between (1) employees in the Of?ce of the Attorney General, the Of?ce of the Deputy Attorney General, the Of?ce of the Associate Attorney General, or the Antitrust Division of DOJ (including the Of?ce of the Assistant Attorney General) and (2) anyone using an email address ending in @nytimes.com, @cnn.com, @turner.com, regarding the Time Warner-AT&T merger, review of Austin R. Evers 1 Page 2 that prOposed merger, coverage of the administration, or Jeff Zucker. . .. from June 20, 2017, to the date the search is conducted. 3. All communications sent or received by employees of the Of?ce of the Attorney General, the Of?ce of the Deputy Attorney General, the Of?ce of the Associate Attorney General, or the Antitrust Division of DOJ (including the Of?ce of the Assistant Attorney General) discussing the July 5, 2017 New York Times article entitled ?The Network Against the Leader of the Free World? or any other media coverage of allegations that President Trump?s opinions about CNN may in?uence DOJ ?s review or approval of the Time Warner- merger. . .. from July 3, 2017, to the date the search is conducted. You also request records describing the processing of your request, including records sufficient to identify search terms used and locations and custodians searched and any tracking sheets used to track the processing of your request. We received and assigned your request control number 11 on July 7, 2017. Please refer to the control number in any future correspondence regarding your request. Enclosed please ?nd copies of 143 pages of documents responsive to item 3 of your request. Deleted document portions re?ecting Antitrust Division staff deliberations, and information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy, are redacted from this material in accordance with 5 U.S.C. 552(b)(5) and (6), respectively. With respect to item 1 of your request, we located and referred a one-page responsive document to the Of?ce of Information Policy for a determination of its public availability and direct response to you. With respect to item 2 of your request, please be advised that a search for responsive records was conducted, but none were located. Your request for records describing the processing of your request essentially asked us to create records as we searched for responsive documents. The FOIA does not require agencies to create records to respond to requests. We will inform you that in searching for documents reSponsive to your request, a search for emails with the following domain names was conducted: @whitehouse.com; @who.eop.com; @nytimes.com; @cnn.com; and @turner.com. A search for White House correspondence was also conducted. Austin R. Evers ATFY 1 7- 1 1 1 Page 3 If you consider my response1 to be a denial of your request, you may administratively appeal by writing to the Director, Office of Information Policy (OIP), United States Department of Justice, Suite 11050, 1425 New York Avenue, NW, Washington, DC 20530-0001, or you may submit an appeal through FOIA online portal by creating an account on the following web site: Your appeal must be postmarked or electronically transmitted within 90 days of the date of my response to your request. If you submit your appeal by mail, both the letter and the envelope should be clearly marked "Freedom of Information Act Appeal}I You may contact Ronald Wiercioch, FOIA Public Liaison, at the telephone number listed above for any further assistance and to discuss any aspect of your request. Additionally, you may contact the Office of Government Information Services (OGIS) at the National Archives and Records Administration to inquire about the FOIA mediation services they offer; The contact information for OGIS is as follows: Office of Government Information Services, National Archives and Records Administration, Room 2510, 8601 Adelphi Road, College Park, Maryland 20740-6001; email. at oois@nara. Iov; telephone at 202?7416 770; toll free at 1-877?684?6448; or facsimile at 202?741?5769. Sincerely, Sue Ann Slates Chief FOIA/Privacy Act Unit Enclosures 1 For your information, Congress excluded three discrete categories of law enforcement and national security records from the requirements of the FOIA. See 5 U.S.C. 552(c). This response is limited to those records thatare subject to the requirements of the FOIA. This is a standard notification that is given to all our requesters and should not be taken as an indication that excluded records do, or do not, exist. From: Martin John ATR To: Tobey, Mark Subject: July 6 2017 News Clips Date: Thursday, July 6, 2017 3:56:05 PM Attachments: July 6 2017 News Team, Attached are news clips from this past week. Best, John Warner News Clips 7/6/17 ?oatents Adding Dozens of Local Strations to Internet TV App 2 White House Reportedly Discussing Time Warner-AT&T Merger as ?Potential Point of Leverage' Over CNN 3 TV networks hide bad ratings with typos, report says 5 AMC tests an ad-free channel on Comcast for Viewers who hate commercials 7 CenturyLink launches $45 OTT service in beta 9 Adding Dozens of Local Stations to Internet TV App Fortune, 06/30/201 7 is adding dozens of local broadcast channels to its Internet delivered DirecTV Now video service as the cable landscape increasingly evolves to try and attract cord cutters. Only some subscribers to DirecTV Now, which starts at $35 a month for about 60 channels, can watch their local broadcast stations to keep up with metro news and other local offerings. Starting next week, the service will add 30 more ABC local affiliates in cities including Atlanta, Dallas, and Boston. Four more NBC stations and the Fox affiliate in Juneau, Alaska, will also become available. After the additions, DirecTV says its local offerings will cover 70% of all households. The local line up is double what DirecTV had when it launched back in November and will be tripled by the'end of August, according to Daniel York, chief content officer. "We will keep the momentum going, and have plans to keep the number of local channels growing on DirecTV Now," York said in a statement. and others including Google's YouTube TV and Dish Network's Sling TV have been able to offer dozens of traditional cable channels to customers who want to forgo the usual set top box set up and get video over the Internet. But adding local channels has proven more challenging, as many are owned by broadcasting companies that see the new services as competition. The number of people cutting the cord and dropping traditional cable TV, or never subscribing in the first place, is growing rapidly. DirecTV Now, which reportedly attracted over 300,000 subscribers in its first two months, is aimed at convincing cord cutters to pay for TV again. Still, has to strike a careful balance in promoting Internet video, as it's also the largest pay TV provider in the country, with its DirecTV satellite offering and U-Verse wired cable service. But those ranks have been shrinking: it lost a net 233,000 pay TV subscribers in the first quarter. http://fortunecom/ZOi White House Reportedly Discussing Time WarneruATSrT Merger as ?Potential Point of Leverage? Over CNN Mediaite, 07/06/201 7 In recent days, President Donald Trump has ramped up his long?running feud with CNN. While the president had taken aim at the network during the campaign and had even begun referring to them as ?fake news" before taking office, his attacks on the outlet have taken a nastier turn of late in the wake of retraction of a story that led to the resignations of three journalists. With Trump taking it to a new level by tweeting out a video featuring him wrestling a figure with a CNN logo for a head, the New York Times gosted a story about how the network is coping with being in the crosshairs of the mostpowerful person in the world. While the piece featured some great quotes Chris Cuomo likening CNN to ?Thunderdome? takes the cake and insights, perhaps the most eye?opening revelation involved how the White House might be willing to interfere in a business deal involving CNN due to the president?s feeling towards the network. White House advisers have discussed atpotential point of leverage over their adversary, a senior administration official said: a pending merger between parent company, Time Warner, and Trump?s Justice Department will decide whether toapprove the merger, say there is little to stopthe deal from moving forward, the-president?s animus toward CNN remains a wild card. It had recently been reported that might be looking to ?neutralize? CNN President Jeff Zucker as part of the merger, with options ranging from tiring him to kicking him upstairs to a corporate executive job with no real input at CNN. Zucker declined to comment on the merger to the NYT but said it has not affected his decision-making. TV networks hide bad ratings with typos, reportsays CNET, 07/06/2017 If I mistakenly write Nitely News,? you can probably still tell what program I'm talking about. Nielsen's automated system can't, however, and a report Thursday in The Wall Street Journal details how networks are taking advantage of that fact to disguise airings that underperform with viewers. It's described as a common practice in the world of TV ratings, where programs with higher ratings can charge advertisers more to run commercials. When an episode performs poorly with viewers, the networks often intentionally misspell the show title in their report to Nielsen, according to the Journal. This fools the system into separating that airing out as a different show and keeping it from affecting the correctly?spelled show?s average overall rating. The report says the practice was initially used sparingly -- for instance, when a broadcast would go up against a major sporting event. But it has now grown fairly common, with NBC misspelling the title of News" 14 times since the current TV season began last fall. At one point, that reportedly included an entire week of broadcasts. Competitors ABC and CBS allegedly followed suit, with ABC reportedly submitting "erd News Tonite" on seven occasions over the same time period. CBS reportedly misspelled the name of its evening newscast as Evening Nws" a total of 12 times. (CBS is the parent cOmpany of CNET.) The Journal says gamesmanship occurs with regards to scripted programming, too. This, the WSJ says, lets networks separate reruns out from first-run episodes and boost a show's overall ratings. Such a practice might be largely for the sake of marketing, with networks typically looking to boast publicly about show performance however possible. Still, it seems odd that Nielsen would allow them to do so with any sort of regularity, given that it ultimately calls the accuracy of its numbers into question. Nielsen issued the following statement to CNET: "With participation and input from clients, Nielsen maintains a rigorous set of policy guidelines for how network clients can and should receive program and commercial ratings credit for their programming. Nielsen takes these Policy Guidelines very seriously and if we ?nd a network working in contrast to this agreed-upon policy, we address the issue in a direct fashion as a way to maintain fairness and balance over all of our clients and the industry as a whole. We have many touch points with clients throughout the season to ensure guidelines are being adhered to ABC, NBC and CBS didn't immediately respond to requests for comment. An NBC spokesperson told The Wall Street Journal that the retitlings were "standard industry practice." AMC tests an admfree channel on Comcast for viewers who hate Commercials The Chicago Tribune, 06/30/20] 7 Advertising-supported TV is taking another step to becoming ?The Walking Dead.? Networks 1110., the cable programming company that is home to the zombie apocalypse drama, on Thursday became the first major ad?supported network to offer a commercial?free version through a traditional television distributor. But the offer comes with a catch: the ad~free AMC Premiere channel is available only to Comcast cable subscribers and it costs an additional $4.99 a month on top of the fees Comcast already charges for its lineup of channels. The move is the latest example of the television industry scrambling to ?nd different ways to market their channels. AMC Premiere is an acknowledgment of the disruption brought on by streaming giants Net?ix, Hulu and Amazon that have conditioned Viewers to expect commercial~free TV content. ?This appears to be an experimental move to see what the demand is for such a channel, and what the appropriate price point should be,? said Derek Baine, a senior analyst at consulting firm SNL Kagan. ?And there is a big niche of AMC fans; many of their shows have large and loyal audiences.? New episodes of such AMC series as ?The Walking Dead,? ?Into the Badiands? and ?Better Call Saul? will be available to subscribers of AMC Premiere at the same time the episodes are shown live, with ads, on the traditional AMC channel. Charlie Collier, president of AMC, SundanceTV and AMC Studios, said in an interview that the on- demand, commercial~free service is not meant to be a replacement for the AMC channel. ?It?s not for everybody,? Collier said. ?It?s for those who want the choice and the upgrade opportunity.? Other programmers have tested commercial-free options. Hulu, which is owned by NBCUniversal, Walt Disney Co. and let Century ox, launched nearly a decade ago with inushow commercials. Hulu eventually rolled out a premium advertising-free option for $11.99 a month, $4 more than the ad? supported service. CBS Corp. introduced its CBS All Access channel directly to consumers nearly three years ago and last summer introduced an advertising?free option for $9.99 a month. (The CBS All Access channel with commercials sells for $5.99 a month and also offers exclusive programs like ?The Good Fight? and an upcoming ?Star Trek? series that aren?t available on TV.) ?They found that there was a demand for ad?free programming at a certain price point,? said Baine, the analyst. AMC, however, appears to be the ?rst network to partner with a traditional pay-TV operator, in this case Comcast, to launch an ad-free option. One industry insider said AMC was probably working with Comcast because many carriage agreements restrict cabie programmers from marketing their channels directly to consumers or a la carte to a competing service, such as Amazon Prime. Baine said AMC might ?nd that only the most ardent fans will pay an additional $4.99 a month for the ad-free option. - ?It?s a lot of money to'pay for one channel,? he said. ?But AMC might be looking for the sweet spot.? Philadelphia-based Comcast, the nation?s largest cabie TV provider with nearly 20 million subscribers, is in discussions with other cable programmers to offer similar services, said Matt Strauss, Comcast?s executive vice president and general manager, video and entertainment services. ?There are a handful of networks of the caliber of AMC that lend themselves to this premium experience, and those are on our shortlist,? Strauss said in a telephone interview. He acknowledged that companies must respond to changes in consumption patterns. ?Viewing habits are continuing to change,? Strauss said._ ?People are becoming more accustomed to watching what they want when they want it.? Collier said he believes that AMC Premiere will ?super serve? fans of its shows by providing additional content not shown on the ad?supported channel. The long?term plan is to expand AMC Premiere beyond Comcast to customers of other cable and sateliite providers that carry AMC. It eventually may be offered to ?over~the-top? streaming services like Hulu that provide video content to cord-cutters. ?We continue to believe that a curated service targeted to superfans content is a compeiling potential revenue-generative opportunity,? Guggenheim Securities media analyst Michael Morris wrote in a report. ?Given the significant amount of high?quality scripted content available to consumers, it is important for branded networks to build stronger engagement with their fans.? For AMC, it is a way to gauge viewer appetite for an ad-free product ?with limited risk,? Morris said. Other cable companies said they are watching the move. ?We are aiways interested in exploring content arrangements that create more ?exibility and improve the viewing experience,? said Todd Smith, a spokesman for Cox Communications, which serves Rolling Hills Estates and south Orange County. ?At the same time, we have to ensure that any new deals don't add unnecessary additional cost to our broader customer base.? AMC Networks stock closed Thursday at $53.26 a share, down 1.39%, or 75 cents. OTT service. inbeta Fierce Cable, 06/30/2017 Centurytink has launched its anticipated virtual service in beta. Per the live-streamed service?s product page, the base tier will run $45 a month and include almost 50 networks, including four iterations of ESPN, History Channel, Food Network, Viceland and HGTV. The page tists NBC and ABC as available networks, but it?s unclear how infiltrated CenturyLink is in terms of local network affiliates. The Fox Broadcast Network and CBS don?t appear to be part of the initial mix. Neither do their associated cable networks. Viacom, Time Warner inc. and AMC Networks channels also seem to be left out of the base tier. Additional sports channels like Outside Television and belN Sports can be added with a $iO~a- month ?Sports Extra? package. Add-ens of smaller networks are also available for entertainment, Latino-targeted entertainment and cabie news, among other programming themes. The skinny bundle is discounted $5 for CenturyLink broadband subscribers. Features include a cloud DVR that can store up to 50 hours of HD programming. News of the CenturyLink beta comes as Chartetr confirmed testing of an lP-based skinny bundte. While Spectrum Stream is an lP?based video service delivered within Charters footprint over managed network, CenturyLink Stream is a full?fledged, nationally distributed virtual MVPD service, competing head~on with Sling TV, DirecTV Now, Hulu Live, YouTube TV, Sony PlayStation Vue and FuboTV. Initially, CenturyLink Stream is supported on Roku OTT devices, as well as i053 and Android mobile devices. it?s also playable on the CenturyLink player, a $90 Android~powered device manufactured by LG Electronics. executives have indicated previously that the introduction of Stream doesn?t bode well for the telco's existing IPTV video product, Prism. ?With over?the~top product, we don?t have to make a truck roll,? said CenturyLink CEO Glenn Post at an investor event in February. ?We have much wider availability due to lower bandwidth requirements of over-the-top. We have network-based storage for DVR. We?ll have local channels to help distinguish that product. And our trial is getting really strong reviews right now. But we have really deemphasized the Prism product because of the margin issue.? From: Cerin To: Hughes, Jared gee, Evan Subject: Playbook, Delrahim QFRS and Hearing Transcript Date: Friday, July 7, 2017 11:58:03 AM Attachments: Delrahim Responses to QFRs,pdf CQ Hearing A'iT-Time Warner 7 Dec 2016 (002mm Excerpt from Playbook? at about the middle CHECK -- parent's $853 deal at little risk from Trump," by Steven Overly and Margaret Harding lVchill: "President Donald Trump has only limited tools for venting his often?expressed fury at CNN, even as his administration weighs whetherto approve bid to purchase the network's parent company, Time Warner. ChietTrump strategist Steve Bannon has pushed the idea of oncking the merger, a White House official told on Thursday, after months in which the president has accused the news network of airing 'fake' and 'dishonest' coverage of his administration. But the official added that Bannon hasn?t mentioned the matter in recent days and that it does not appear to be at the top of his agenda. "And many industry observers say Trump's Justice Department has no obvious antitrust arguments for blocking $85 billion deal, which would give the telecom and wireless giant control of an entertainment conglomerate whose holdings include CNN, HBO and the Warner Bros. movie studio. 'Just because you don't like CNN doesn?t mean you can block a merger,? said Rich Greenfield, a media and tech analyst at the investment research ?rm BTIG. 'You still need a legal basis, and calling CNN 'fake news' or doesn?t make the transaction illegal.?II htto://oolitrco/2SUXC7G? Also here is an excerpt from Makan Delrahim's QFR responses to Senate Judiciary Committee. I attached the hearing transcript as well just in case. :2 Last Th?, tidal} agreed. ?its purchase Time for $85 bitiinn. 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"an yen explain the. harm (31?th danger that yea thin}: Vern-cat mergers can. present its consumers and competition? it Wt?a?ultl hr: for me to disease any pending mergers under greetew by tire Anti-treat Tjivisieu. era a general matter, past conseitristticm is :1 title: that simutd be and is referent in pa rticuier merger reviews, but it is hard? make- any general regarding when a [we] of camsolida?rion lac-come?: tee much? Ttrdopends am the facts and air-cuntstedces, I litmjority tr!" antitrust schoiars reengnim ti a: meat vertical nwrgers raise lie-sis serious concerns than iinrimninl mergers Widen bring tagetlmr firms tampering directly against one {3m rermon is that certain vertical mergers can create- efficiencies that benefit canaumers in a way thatimrimnta'l mergers may eta-L. the same time. there are instaneea when: :5 vertical merger army [ewe antimomgg?set'itijve effects. As; with any pnten tie] tofu-reunited 1: action, it is {Warfare important to carefully" and cleanly assess the facts tee determine whether there is, on balance, a harm it} era {lowing tram. the nreposed transau?am The vertical mergers most? likely ?3 Will ?1 ?3?05?3 twist-331 enforcers are. timer: Where there is risk that - upstream or campa?tian may he ?fl;lrec}oaed by the transaction. QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE AN TIT RUST DIVISION QUESTIONS FROM SENATOR GRASSLEY, 1. As you may know, I am very concerned with the rising cost of prescription drugs. The Justice Department has an important role to play in ensuring that drug companies do not engage in antiwcompetitive practices or monopolistic behavior. a. if you are continued to lead the Antitrust Division, What steps will you take to make sure that both brand name and generic drug companies play by the rules? RESPONSE: I agree that the Department of Justice has an important role to play in ensuring that drug companies do not engage in anti?competitive practices, criminal or civil, or monopolistic behavior. If con?rmed, working with our colleagues at the Federal Trade Commission, I will ensure potential antitruSt violations in this industry are investigated and, if any Department of Justice investigation uncovers a violation of the antitrust laws, purSHe?that violation aggressively. 2. lhave additional concerns about increased agribusiness concentration, reduced market opportunities, and fewer competitors in the agriculture sector. I also worry about the potential for inereased antiwcompetitive business practices in agriculture. Right now, there are a number of mergers occurring in the agriculture sector that could completely change the market and impact the agriculture industry and consumers. I believe that the Justice Department?s Antitrust Division needs to dedicate more time and resources to agriculture competition issues. a. If you are con?rmed, can you assure me that agriculture antitrust issues Will be a priority for the Antitrust Division? RESPONSE: The agricultural sector, including farmers, is important to the nation?s economy. I know ?rsthand from my previous service at the Senate and the Department of Justice your commitment and interest in ensuring a vibrant and robust agriculture industry. I agree that the Antitrust Division needs to devote the time and resources necessary to understand the competitive implications of proposed transactions or conduct in agriculture. If con?rmed, I commit to you to make that a priority. 3. Some of my constituents have expressed concerns with armeeting between then President- Elect Trump and Monsanto and Bayer executives about the proposed merger between the two companies. Did anyone involved in your nomination at the White House ask you, at any time, to take a predetermined position on the Monsanto?B ayer merger as a condition of your nomination? I RESPONSE: No. 4. I believe that the Justice Department and the Department of Agriculture, which enforces the Packers and Sto ckyard Act, should collaborate and work together to monitor anti?competitive activity in the agriculture industry. If you are con?rmed, will you commit to foster a closer and more productive relationship with the Department of Agriculture? RESPONSE: If con?rmed, I will take any necessary steps to foster a close and productive relationship with the Department of Agriculture With respect to anticompetitive conduct in the agriculture industry. 5. A March 2017 International Competition Policy Expert Group report, commissioned by the US Chamber of Commerce, raises concerns about Whether foreign competition authorities are using their antitrust laws to bene?t national champions. The report asserts that ?[c]ertain of our major trading partners appear to have used their laws to actually harm competition by US. companies, protecting their own markets from foreign competition, promoting national champions, forcing technology transfers and, in some cases, denying US. companies fundamental due process.? Are you concerned about the use of foreign competition laws to assist national champions and to advance an industrial or trade policy? Do you agree with the ?ndings and of the report? If you are continued, What steps will the Antitrust Division take under your direction to address these challenges and better harmonize/cooperate with other international antitrust authorities? RESPONSE: I ?rmly believe that antitrust laws should not be misused by foreign authorities to defend their national businesses or to try to exclude American businesses from foreign markets. The underlying basis for all antitrust actions, in the United States and elsewhere, should be appropriate legal and economic analysis. I understand that the Antitrust Division communicates this message to the international community in a number of ways. When I was a Deputy Assistant Attorney General at the Antitrust Division, one of my primary responsibilities was representing the Division?s international affairs. In that capacity, I advocated strongly for foreign enforcers to apply sound, competition-based principles in their own enforcement efforts. If I am con?rmed as Assistant Attorney General, I will support the continuation and strengthening of those contacts as well as exploring additional avenues to ensure American businesses and consumers are not harmed by discriminatory antitrust, enforcement by foreign antitrust authorities. 6. I understand that when competition law enforcement concerns are raised with the government, it is the practice of the Justice Department and the Federal Trade Commission to discuss the issues raised and determine which agency will take the lead on investigation of the allegations. How are these assignments of responsibility decided? What is the criteria utilized for these decisions? Do you intend to continue this practice? RESPONSE: The FTC and Department of Justice share certain antitrust jurisdiction over merger and civil nonmerger matters in many, but not all industries. For example airline and telecommunications mergers are subject to the jurisdiction of only the Department of Justice. Over the years the two agencies have developed a clearance process to ensure that only one agency reviews particular transactions or conduct. If I am con?rmed, I will work closely with the Federal Trade Commission to review past divisions of responsibility and ensure that future divisions of responsibility between the agencies are both appropriate and ef?cient. 7. Media, entertainment, information and telecormnunications markets are rapidly evolving, with internet and technology ?rms challenging traditional telecom companies. In your opinion, how should the Justice Department analyze this market? Do traditional merger analysis methods work for mergers that involve converging platforms and technologies? How should the Antitrust Division determine the competitive effects of mergers between different complex, interconnected platforms? RESPONSE: The antitrust laws have been in place for well over 100 years and continue to play a vital role in protecting competition despite how the economy and industries have evolved. I believe those laws are flexible enough to take into account industries that are rapidly evolving and involve converging platforms and technologies. It is incumbent on antitrust enforcers to understand changing and evolving industries, but I believe they can apply traditional analysis to determine Whether antitrust violations exist. I will investigate and vigorously enforce the antitrust laws with respect to online platforms as I would in any industry, based on the economic and analytical tools appropriate to the circumstances and to ensure robust competition and innovation. 8. What is the proper role of the antitrust and consumer protection laws in a high tech, commerce economy? RESPONSE: Antitrust has a vital role to play in the high?tech, e-commerce economy to protect consumers. Actions by ?rms that threaten competition in the high?tech, e- commerce economy, whether by merger or conduct, should be investigated and purSued if the investigation uncovers an antitrust law violation. 9. Could you discuss your general philosophy with respect to the intersection of intellectual property and antitrust? What challenges do you see for the Antitrust Division in this area? RESPONSE: As a registered patent attorney, I have a deep background and interest regarding the intersection of intellectual property and antitrust. Intellectual property rights are a form of property and recognized in the US. Constitution. I feel strongly that an intellectual property owner?s rights need to be respected and protected. It is my view that the intellectual property laws combined with the proper enforcement of antitrust laws together form the basis of our successful innovation policy. At the same time, antitrustenforcers have a legitimate role in ensuring that intellectual property rights are not abused in violation of the antitrust laws. One of challenges I foresee in this area is dealing with international enforcers who may not necessarily place the same value on intellectual property rights abroad that we do in the United States, or that may enforce their antitrust laws in ways that could sti?e innovation. l. QUESTIONS FOR THE RECORD DELRAIHM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR FEINSTEIN, RANKING MEMBER It?s my understanding that you were the primary lobbyist on behalf of Anthem and advocated in favor of its proposed merger with Cigna. The Justice Department successfully blocked that merger earlier this year. Because the litigation over the merger is still going on, you have pledged to recuse yourself from ?any further involvemen in this matter if you are con?rmed. a. Do you believe your participation in matters related to the Anthem?Cigna merger would present a con?ict of interest? 1). Please describe the steps you will take to recuse yourself ?om this matter. RESPONSE: It is my understanding, according to press reports, that Anthem announced on May 12 that it was abandoning further efforts to complete the contemplated merger with Cigna. Having noted that, should there be any further activity associated with that merger, I will recuse myself from any involvement in this matter to avoid any con?icts of interest or appearance thereof. 2. I understand that the current Acting Assistant Attorney General, Andrew Finch, may also 3. have a con?ict of interest related to the merger because his former law firm represented Cigna. - a. Will you also take steps to ensure that he is recused from participation in matters related to the merger? b. Assuming Mr. Finch is also recused from this matter, who will be the person in the Antitrust Division with primary responsibility for supervising the Anthem Cigna matter? RESPONSE: It is my understanding, according to press reports, that Anthem announced on May 12 that it was abandoning further efforts to complete the contemplated merger with Cigna; I am aWare that Mr. Finch has been and is recused from working on the matter. My understanding is that a career Deputy Assistant Attorney General has the primary responsibility?for supervision of the matter. During a court hearing over whether Cigna could terminate its proposed merger with Anthem, Anthem?s attorney repeatedly suggested that the merger would be cleared under the ?new? Department of Justice in the Trump administration. Speci?cally, he told the court that ?now Vice President Pence was supportive of the transaction as the governor of Indiana? and ?we?re reaching out to DOJ, which is new, by the way. There is a con?rmed Attorney General, Sessions.? The Anthem attorney made these statements even though the previous Attorney General concluded that the merger ?would restrict competition for health insurance products sold in markets across the country and would give tremendous poWer . over the nation?s health insurance industry to just three large companies.? a. Do you believe that these statements were appropriate? b. Do you believe that the Antitrust Division?s approach to determining Whether a merger would have anticompetitive effects should change based on which party is in of?ce? RESPONSE: As I noted at my con?rmation hearing, there should be no political in?uence in antitrust law enforcement decisions. I cannot otherwise speak to any statements that Anthem?s representatives made well after my representation of the company ended. Indeed, I have been recused from any involvement in the matter since joining the Administration. The Antitrust Division?s merger enforcement should be based, in any case, on application of the laws written by Congress to the particular facts and circumstances presented by the merger regardless of the party in of?ce. 4. In March 2017, the International Business Times submitted a Freedom of Information request to the Antitrust Division seeking correspondence between you and members of the Antitrust Division while you were lobbying on behalf of the Anthemeigna merger. DOJ not only denied the requesthOJ refused to confirm Whether any such documents exist. According to DOJ, even acknowledging any such communications without your consent would be ?a clearly tmwarranted invasion of personal privacy.? lbelieve whether you corresponded with the Department of Justice about the Anthem merger and What you said are extremely relevant to our consideration of your nomination. a. Did you correspond with DOJ during the time period you were lobbying on behalf of Anthem? b. Will you agree to waive any privacy interest you might have in any DOJ documents that are relevant to the International Business Times? FOIA request? RESPONSE: To the best of my recollection, my only communications with the federal government with reSpect to this matter were with Congress and I had none with the Department of Justice. The Freedom of Information Act (FOIA) promotes transparency and accountability in the government. If con?rmed, I will strive to ensure that the Antitrust Division complies with all laws and regulations, including FOIA laws. I will respect any decision made by FOIA of?cials with respect to this request under FOIA. 5 . You will oversee the Division within DOJ that is responsible for enforcing our country?s antitrust laws. Many consumers don?t think about antitrust laws. But the enforcement of these laws saves consumers millions, and in some cases even, billions of dollars each year; If con?rmed, What will you do to protect consumers? RESPONSE: If con?rmed, my focus for the Antitrust Division would be on cartel behavior that raises prices or otherwise adversely affects the welfare of consumers; mergers and other forms of consolidation that risk a substantial lessening of competition; and single ?rm or collusive conduct that suppresses the free market competition to which consumers are entitled. In recent years, international regimes have increasingly passed antitrust laws and started enforcement programs; accordingly, I believe that I should also focus on close consultation with competition enforcement of?cials from other jurisdictions in an effort to promote fair, transparent, and consistent application of competition principles for the benefit of American consumers, businesses and workers. 6. Over the last 12 months, We have seen an unprecedented increase in proposed mergers in the agriculture industry. Dow Chemical has proposed a merger with DuPont, Syngenta has proposed a merger with ChemChina, and Monsanto has proposed a merger with Bayer. While any of these mergers alone might not raise signi?cant concerns, the prospect of these three mergers occurring around the same time, raises serious concerns. Will you review these mergers in isolation from each other or will you review them in light of the other pending agriculture mergers? RESPONSE: While it would be inappropriate for me to discuss particular pending mergers, I believe in general that any merger should be evaluated in light of the facts and circumstances, including the likely future composition of the industry. 7. Many proposed mergers and investigations of antiucompetitive behavior have signi?cant impacts on my state and I believe it is important for state law enforcers to havean equal seat at the table with DOJ when that?s the case. I know the Division often coordinates investigations and merger review with the states and lbelieve that is very important. Do you agree, and would you commit to continuing to cooperate with state attorneys general and other relevant state of?cials? RESPONSE: I believe it is bene?cial to both the federal antitrust agencies and the states to cooperate in enforcement actions, including sharing relevant information Where lawful and appropriate. If con?rmed, I Will commit to cooperating in appropriate cases with my state attorney general colleagues. 8. Many online platforms benefit from network effects that make them dominant means for business to connect with consumers, giving them disproportionate power over the evolution of competition and the services available to consumers. Do you have any thoughts on competitive challenges in this area? RESPONSE: The antitrust laws cover unilateral and coordinated conduct in industries throughout the economy, including companies operating on the Internet such as enline platforms. Over time, these laws have proven effective and adaptable to various types of anticompetitive conduct even as industries have evolved and technology has created new markets. If I am con?rmed, the Antitrust Division will investigate and vigorously enforce the antitrust laws with respect to online platforms as I would in any industry, based on the economic and analytical tools appropriate to the circumstances and to ensure robust competition and innovation. 9. 10. 11. In 2011, the Department of Justice sued to block planned acquisition of T~Mobile Since then, T~Mobile has played a criticaily important role in providing more choices and lower prices to consumers. Do you believe DOJ made the correct decision blocking this merger, and why? . RESPONSE: I was not privy to the con?dential information and analytical data the Department had in its possession at that time, and therefore am not in a position to comment. In 2014, Sprint appeared interested in acquiring T?Mobile, but was dissuaded from pursuing the transaction when the idea was met with skepticism by regulators who believed a merger that took the market ?om 4_ national competitors to 3 wasn?t good for competition or consumers. In 2013, the Department of Justice wrote to the FCC expressing concern about the threats to competition in the wireless market, speci?cally the conCentration of valuable lowwband spectrum held by the two largest carriers. a. What is your impression of the state of competition in the wireless market? RESPONSE: I have not recently studied the state of competition in the wireless market and therefore do not have any particular impression regarding its competitiveness at this time. If con?rmed and presented the opportunity, I look forward to studying it. In 2011, approved the Comcast/N C?Universal transaction with several conditions. a. Do you believe those conditions have effectively prevented the harms to consumers and competition they were designed to address? b. Those conditions are set to expire in 2018. Do you believe any of the conditions should remain in place? 0. If not, how has the market changed to make these behavioral remedies d. If DOJ merger conditions are ineffective at addressing the harms to consumers and competition they were meant to stop, at what point should D03 begin to take action to break up the merged ?rm? RESPONSE: I was not privy to the information the Department had in its possession at that time, and therefore am not in a position to comment on whether the decision was correct or not. With respect to the Comcast/NBC Universal transaction, I have not studied the merger action, nor its effects. If confirmed, I look forward to learning about the decree and its effectiveness. It is important for antitrust law enforcers to be con?dent that the remedies they impose will be effective with respect to the competitive problem identified when they take action against a merger. It is likewise important for parties that commit to conditions as part of the merger review to live up to those conditions and for the Department to vigorously ensure compliance. 12. Last fall, agreed to purchase Time Warner for $85 billion. Since then, there have been suggestions that the Warner deal could be a precursor for signi?cant consolidation in the telecom, cable, broadband, and media industries which are already signi?cantly consolidated. As recently as last week, there were rumors that Verizon may look to purchase one of the two largest cable companies, Comcast or Charter, or a major media company like Disney or CBS. a. At What point is there too much consolidation? b. Should merger reviews consider the potential for a transaction to spur a Wave of consolidation that ultimately will prove to be harmful to consumers and competition? 0. Do you believe that vertical mergers should concern antitrust regulators? d. If so, can you explain the harm or the danger that you think vertical mergers can present to consumers and competition? RESPONSE: It would be inappropriate for me to discuss any pending mergers under review by the Antitrust Division. As a general matter, past consolidation is a fact that should be and is relevant in particular merger reviews, but it is hard to make any general statements regarding when a level of consolidation becomes too much. It depends on the facts and circumstances. I think the majority of antitrust scholars recognize that most vertical mergers raise less serious competition concerns than horizontal mergers which bring together ?rms competing directly against one another. One reason is that certain vertical mergers can create ef?ciencies that bene?t consumers in a way that horizontal mergers may not. At the same time, . there are instances where a vertical merger may have anticompetitive effects. As with any potential enforcement action, it is therefore important to carefully and closely assess the facts to determine Whether there is, on balance, a harm to consumers ?owing from the proposed transaction. The vertical mergers most likely to require a close look by government enforcers are those where there is risk that upstream or competition may be foreclosed by the transaction. 13. You currently serve as Deputy Associate Counsel to President Trump. On May 9, 2017, President ?red the Director of the FBI, James Comey. On May 10, 2017, the Washington Post reported the following about Director Comey?s ?ring: ?Within the West Wing, there was little apparent dissent over the president?s decision to fire Carney, according to the accounts of several White House of?cials. McGahn, the White House counsel, and Priebus, the chief of staff, walked Trump through how the dismissal would work, with McGahn?s legal team taking the lead and coordinating with the Justice Departmen a. When did you ?rst hear that Director Comey might not stay in his position for the duration of his term? How did you find out? Who told you, and what reasons did that person give for Director Comey?s removal? Did you discuss it with anyone else? Did you see any documents or emails about Director Comey?s possible or actual removal beforehand? When did you become aware that Director Comey would be removed from his position as FBI Director? g. HOW did you find out? $39.09" H3 h. Who told you and what reasons did that person describe for his removal? i. Did anyone solicit your opinion as to Whether Director Corney should be removed? If so, who? j. Did you tell anyone inside the Executive Of?ce of the President your View as to whether Director Comey should continue as FBI Director? k. Did you tell anyone at the Department of Justice your View as to whether Director Comey should continue as FBI Director? 1. Were you part of Mr. McGahn?s legal team that ?[took] the lead and coordinat[ed] with the Justice regarding Director Comey?s ?ring? RESPONSE: I learned of the dismissal of FBI Director Comey on the evening of May 9, 2017, only through news reports. 14. On May 9, the President ?red FBI Director James Comey. On January 30, the President ?red Acting Attorney General Sally Yates. The President has made very clear that he will ?re individuals who disagree with him or who pursue investigations against his wishes. Kellyanne Conway, one of the President?s advisers, stated on May 11 that President Trump ?expects people who are serving in this Administration to be loyal to the country and to be loyal to the Administration.? Yet if con?rmed, you will be called upon to exercise independence and to serve the American people, not the President. a. How can this Committee have con?dence that you will be independent from the President? 13. What speci?c examples from your background offer evidence that you will not re?exively do what the WhiteHouse wants you to do? 0. Do you believe it is important for the Assistant Attorney General of the Antitrust Division to be, ?rst and foremost, ?loyal to the Administration?? RESPONSE: I believe that it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, Without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not in?uence the handling of particular cases. During my time in government service and private practice, I have been called on to advise clients on many sensitive matters. To the best of my recollection, I have never been in a-situation Where I have had to compromise my principles due to White House or other political pressure, including, in particular, my previous! service at the Department of Justice. It is important for the Assistant Attorney General for the Antitrust Division to be, first and foremost, loyal to preserving and protecting competition through the sound enforcement of the antitrust laws and, if con?rmed, that will be my loyalty in addition to my loyalty to the Constitution and to my ethical obligations as an officer of the court. 15. Please describe with particularity the process by which these questions were answered. RESPONSE: The answers are my own and re?ect my views. I discussed my answers and consulted with representatives of the Department of ustice as I deemed helpful and appropriate. 10 1. QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR LEAHY You served as Senator Hatch?s Staff Director on the Judiciary Committee from December 2000 until July 2003. In that role, you hired the staff who hacked into the Democrats? computer system, including Mr. Manuel Miranda. For months during your tenure as Staff Director, Mr. Miranda and others engaged in continuing theft of the Judiciary Democratic staff ?les, including over 4,000 con?dential strategy memoranda. These unconscionable actions were eventually discovered after a number of leaks by Mr. Miranda. While the Sergeant at Arms investigation did not begin until November 2003, as early as February 2003 some of Mr. Miranda?s leaks made it into the media. Since you were Staff Director during this period, I would request that you answer the following questions for the record: a. Did you have any knowledge of the illegal accessing of Democratic computer systems and theft of documents, which took place over the course of several years? b. Did Mr. Miranda ever give you any indication where he sourced his intelligence on Democrats? strategy? If so, when? If not, did you wonder or question how he - accessed such information? 0. Do you feel responsible for the actions of your subordinates on this matter? RESPONSE: I had no knowledge or role in the hacking by Senate Republican Staff of Democratic ?les between 2.001 and 2003. The first I learned of the activity was through public reporting after I had left the Senate Judiciary Committee staff. At that time, I fully cooperated and assisted the Senate Sergeant-at?Arms in the investigation into the conduct. I would also like to note that to the best of my knowledge, Mr. Miranda?s activities accessing the documents occurred while he was on Senator Frist?s staff and not on the Senate Judiciary Committee staff. As a lobbyist for Anthem, you worked to have Anthem?s proposed merger with Cigna approved. Will you recuse yourself from any Justice Department involvement in this matter? RESPONSE: Yes. I would also note that it is my understanding, according to press reports, that Anthem announced on May 12 that it was abandoning further efforts to complete the contemplated merger with Cigna. When a reporter filed a FOIA request with the Antitrust Division for communications between you and the Antitrust Division during your time as a lobbyist, he reportedly received a Glamor response. a. While working for Anthem, did you contact anyone at the Antitrust Division, in particular regarding the proposed merger with Cigna?? b. lfcon?rmed, will you ensure that the Division fully complies with FOIA, including the presumption of openness that was codi?ed last year by the FOIA Improvements Act? 11 RESPONSE: To the best of my recollection, my only communications with federal government with respect to this matter were with Congress and I had none with the Department of Justice. The Freedom of Information Act promotes transparency and accountability in the government. If con?rmed, I will strive to ensure that the Antitrust Division complies with all laws and regulations, including FOIA laws. I will reSpect any decision made by FOIA of?cials with respect to this request under FOIA. 4. Last week, President Trump cited the FBi?s investigation into Russian interference in the 2016 election as a basis for dismissing Director Comey. The Deputy White House Press Secretary said, ?We want this to come to its conclusion . . . And we think that we?ve actually by removing Director Comey, taken steps to make that happen.? President Trump himself admitted that was gonna tire [Comey] regardless of [Mn Rosenstein?s] recommendation. . . . And in fact when I decided to just do it, I said to myself, i said you know, this Russia thing with Trump and Russia is a made up story.? Should those statements and justi?cations for FBI Director Corney?s dismissal raise concerns? RESPONSE: As the nominee for the position of Assistant Attorney General for the Antitrust Division, I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without regard to political considerations. In light of the con?dentiality interests that attach to executive branch and White House decision-making, I am unable to comment further. 5. Is it proper for the President to pressure a law enforcement official to terminate an ongoing investigation into one of the President?s associates? RESPONSE: I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not in?uence the handling of particular cases. 6. if continued, will you be loyal to the Constitution or to President Trump? Do you believe there is a difference? If so, will you put your obligation to uphold the Constitution above any personal loyalty to President Trump? RESPONSE: If confirmed, [will adhere to my oath of office, which obligates me to Support and defend the Constitution of the United States. 7. If anyone from the White House contacts you about a matter pending before the Antitrust Division, how would you respond? Would such contact violate Justice Department guidelines governing contacts between Department of?cials and the White House? 12 RESPONSE: I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by AttorneynGeneral Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not in?uence the handling of particular cases. 8. Several large mergers are pending or were pending before the Justice Department?s Antitrust Division, including Bayer/Monsanto, Anthem/Cigna, and Warner. a. Have you had any communication with anyone in the Trump administration or Trump transition team involving any such matters before the Antitrust Division and, if so, specify the nature of that communication and the identity of any administration or [transition team of?cial you communicated with? RESPONSE: I have discussed my potential recusals with Justice Department and Administration ethics of?cials. I was not asked, nor have I provided, any commitments or assurances regarding any potential enforcement actions or pending matters before the Antitrust Division. In light of the con?dentiality interests that attach to executive branch and White House decision?making, I am unable to comment further. 13 QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR DURBIN 1. The credit and debit card industries, which handled about six trillion dollars in electronic payments last year, are dominated by the market power of the Visa?MasterCard duopoly. These companies have the power to dictate security standards, ?x interchange fee rates, mandate terms of card acceptance, and sti?e market entry by potential competitors. Do you think the credit and debit card industries deserve careful antitrust scrutiny? RESPONSE: I believe that antitrust enforcers should be keenly aware of industries that affect American consamers in their everyday lives, and the credit and debit card industries are important industries in that regard. Based on my previous experience at the Department of Justice, I know first?hand the Antitrust Division has given and, if confirmed, I pledge it will continue to give careful scrutiny to these industries. 2. What in your View is the benchmark for excessive consolidation in a market? RESPONSE: In the abstract I think it is dif?cult to de?ne such a benchmark given how markets may vary. For example, the amount of concentration that might be of concern in a market with high entry barriers could be signi?cantly less of a'concern in a market with little or no entry barriers. As a general matter, I think one could take guidance from the TC Horizontal Merger Guidelines which refer to a highly concentrated market when the Index exceeds 2500. 3. Do you support presumptions of anticompetitiveness for proposed mergers that exceed a certain level of market concentration? RESPONSE: Yes, such a presumption is contained in the case law and the Horizontal Merger Guidelines. a. Is it appropriate for the President~elect or President to have private meetings with the CEOs of companies that are undergoing merger reviews? RESPONSE: The President or other Federal Government of?cials may have a variety of reasons to discuss issues with industry CEOs, including those Who may have a particular merger under review. It is important to note that there are safeguards in place, as re?ected in the January 27, 2017, White House Counsel Donald McGahn memo entitled ?Communications Restrictions with Personnel at the Department of Justice? and the Attorney General Holder memo dated May 11, 2009. These memos were promulgated to protect cases and investigations from political in?uence. 1 will comply with these memos to ensure the integrity and 14 independence of Antitrust Division investigations. b. Do such meetings create the appearance that the President is involving himself in the merger review process? RESPONSE: The President or other Federal Government of?cials may have a variety of reasons to, discuss issues with industry CEOs, and that might include those who may have a particular merger under review. As noted above, it is important to note that there are safeguards in place, as re?ected in the January 27, 2017, White House Counsel Donald McGahn memo entitled ?Communications Restrictions with Personnel at the Department of Justice? and the Attorney General Holder memo dated May 11, 2009. These memos were promulgated to protect cases and investigations from political in?uence. I will comply with these memos to ensure the integrity and independence of Antitrust Division investigations. 5. Was it appropriate for President-elect Trump to meet with the CEOs of Bayer and Monsanto in private Trump Tower meetings during the transition while those companies had pending mergers under review? RESPONSE: The President or other Federal Government of?cials may have a variety of reasons to discuss issues with industry CEOs, and that might include those who may have a particular merger under review. It is important to note that there are safeguards in place, as re?ected in the January 27, 2017, White House Counsel Donald McGahn memo entitled ?Communications Restrictions with Personnel at the Department of Justice? and the Attorney General . Holder memo dated May 11, 2009. These memos were promulgated to protect cases and investigations from political in?uence. I will comply with these memos to ensure the integrity and independence of Antitrust Division investigations. a. Is it true that you had no knowledge of, and no role in, the hacking by Senate Republican Staff of Democratic files between 2001 and 2003? RESPONSE: I had no knowledge or role in the hacking by Senate Republican Staff of Democratic ?les between 2001 and 2003. The ?rst I learned of the activity was through public reporting after I had left the Senate Judiciary Committee staff. b. What did you do when you learned about your staff?s involvement in this hacking? RESPONSE: I learned of the activities by public sources after I had left the Senate Judiciary Committee staff and was working in the Antitrust Division of the Department-of Justice. At that time, I fully cooperated and assisted the Senate Sergeant?at?Arms in the investigation into the conduct. 15 QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE AN TITRUST DIVISION QUESTIONS FROM SENATOR WHITEHOUSE 1. For the last 40 years, the White House has imposed a policy restricting the of White House staff to the Department of Justice to avoid political in?uence, or even the appearance of political in?uence, on the Department of ustice? investigative and enforcement functions. On January 27, 2017, White House Counsel Donald McGabn issued a memo Communications Restrictions with Personnel at the Department of Justice to restrict communications between White House staff and DOJ. a. What was your role: if any, in developing that policy? b. Have you given any guidance or training on that policy to other officials in the White House? RESPONSE: I am aware of the White House Counsel?s memo entitled ?Communications Restrictions with Personnel at the Department of Justice.? As you note, this policy includes guidance limiting discussions between the White House and the Department of Justice regarding ongoing or contemplated cases or investigations. The White House Counsel?s Of?ce, through its ethics compliance program, provides training for White House staff. 2. This month, Senators Franken, BluInenthal and I wrote to Don McGahn asking why the White House had not made public a policy governing contacts between the White House and iaw enforcement agencies outside the Department of Justice. a. Is there additional guidance from the White House Counsel?s of?ce akin to the above-referenced January 27, 2017 memo that restricts communications from White House staff to other agencies regarding enforcement activity at other agencies besides If not, why? b. If a written policy has been established, what steps have been taken to disseminate it to relevant federal law enforcement agencies? Have you advised other agencies to institute, or update as the case may be, agency policies related to contacts with the White House that re?ect the January 27th policy? 0. What enforcement mechanisms does the Of?ce of White House Counsel have in place to enforce official policy with respect to White House-law enforcement agency contacts? RESPONSE: In light of the con?dentiality interests that attach to executive branch and White House decision-making, I am unable to comment. 3. Developments since the January 27th memo have also raised questions about whether that memo provides sufficient guidance to prevent inappropriate contacts between the White House and the Department of Justice and what steps, if any, the White House is taking to enforce it. Reports of the following events are of particular concern: l6 a. Efforts by the White House Counsel?s of?ce on or about March 3, 2017, to secure access to what you believed to be an order issued by the Foreign Intelligence Surveillance Court authorizing surveillance related to President Trump and his associates. b. A request by White House Chief of Staff, Reince Priebus, to the FBI on or about February 15, 2017, asking the agency to refute reports that Trump campaign advisers had contact with Russia during the 2016 presidential. campaign. 0. A call from White House Senior Adviser Stephen Miller to the home of Robert Capers, the US. Attorney for the Eastern District of New York, on or about February 3 2017, to dictate how he should defend the Administration?s travel ban. d. A call from President Trump to U. S. Attorney for the Southern District of New York Preet Bharara on or about March 9, 2017, the day before he was asked to resign from his position. Do you believe any of these reported contacts with the White House violate the January 27 policy contacts policy that you helped author? Are you aware whether an investigation 7th Was conducted into whether the contacts violated January 2 policy and what conclusions were made? RESPONSE: I lack suf?cient personal knowledge to express an opinion as to whether the contacts you reference are in compliance with the White House policy. 4. Under what circumstances would it be appropriate for a White House employee to communicate with DOJ about a speci?c pending antitrust enforcement or litigation action? RESPONSE: The White House Counsel?s memo entitled ?Communications Restrictions with Personnel at theDepartment of Justice? provides guidance limiting discussions between the White House and the Department of Justice regarding ongoing or contemplated cases or investigations. As stated in the policy, it was issued to ?ensure the DOJ exercises its investigatory and prosecutorial functions free from the fact or appearance of improper political in?uence.? I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not in?uence the handling of particular cases. 5. It is so important that exercises its antitrust authority impartially that Congress enacted the Tunney Act, which requires that antitrust consent decrees be subject to public comment and judicial review, and also disclose all contacts between settling defendants and any federal employees. It was passed after disclosure of President Nixon? in?uence on then Deputy Attorney General Richard Kleindienst to (hep DOJ ?s antitrust suits against International Telephone and Telegraph in exchange for campaign donations. a. If, as head of the Antitrust Division, you received an email or phone call from a .17 former colleague in the White House Counsel?s of?ce about a merger or other anti? competitive activity for which your division was either contemplating an investigation or enforcement action or was already engaged in litigation, would you take that call or answer that email? What other steps would you take? b. If, as head of the Antitrust Division, you receive any communications by the White House, or become aware of such communications to DOJ staff, regarding a particular antitrust matter, will you commit to informing this committee of such communications within one week of when the communication is made or attempted? RESPONSE: I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without regard to political considerations. Contacts from the President or the White HouSe must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not in?uence the handling of particular cases. 18 QUESTIONS FOR THE RECORD DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR KLOBUCHAR 1. Historically, horizontal mergers have draw more attention than vertical acquisitions. More and more, I am hearing concerns about vertical mergers. For example, both independent video content providers and independent video distributors worry that they may be discriminated against if video distributors acquire their own content providers. And farmers have raised concerns that the combination of seed companies with companies focused on genetic traits will result in less innovation. a. Do you believe vertical mergers can be anticompetitive? b. How would you analyze such mergers? RESPONSE: I think the majority of antitrust schoiars recognize that most vertical mergers raise less serious competition concerns than horizontal mergers, which - bring together firms competing directly against one another. One reason is that certain vertical mergers can create ef?ciencies that bene?t consumers in a Way that horizontal mergers may not. At the same time, there are instances where a vertical merger may have anticompetitive effects. As with any potential enforcement action, it is therefore important to carefully and closely assess the facts to determine whether there is, on balance, a harm to consumers ?owing from the proposed transaction. The vertical mergers most likely to require a close look by government enforcers are those-where there is risk that either upstream or competition may be foreclosed by the transaction. 2. The Antitrust Subcommittee took a close look at Anheuser?Bush lnBev?s acquisition of Miller?Coors. We held a hearing, and Senator Lee and jointly raised concerns with the Department of Justice that the merger could limit the ability of independent wholesalers to carry craft beer, which, in turn, could sti?e the growth of craft beer. The Department of Justice eventually reached a settlement with the merging companies with conditions to protect competition, including an independent monitor. a. Can you commit to me that you will make sure the companies abide by those conditions? RESPONSE: It is important to ensure that companies are abiding by the commitments they made in the Division?s consent decrees. I will commit to you to take vigorous steps to ensure that the companies in this transaction abide by the commitments they made. 3. According to some, newspapers face internet platforms with market power. Instead of using that power to increase choices for consumers, the concern is that those platforms may use it to extract a greater share of advertising revenue at the expense of newspapers or other media. I raise this example because a reduction in the quality of the press threatens not just the press, 19 but the vibrancy of our democracy. Some have suggested to me that antitrust enforcement should not be concerned with monopsony issues. What is your view? RESPONSE: I believe that antitrust laws are concerned with and should be concerned with monopsony issues. The antitrust laws cover unilateral and coordinated conduct in industries throughout the economy, including companies operating on the Internet such as online platforms. Over time, these laws have proven effective and adaptable to various types of anticompetitive conduct even as industries have evolved and technology has created new markets. If I am con?rmed, the Antitrust Division will investigate and vigorously enforce the antitrust laws with respect to online platforms as I would in any industry, based on the economic and analytical tools appropriate to the circumstances and to ensme robust competition and innovation 4. Our antitrust laws are rooted in the sound principle that competitive marketplaces form the foundation of a thriving economy. A century later after their passage, the antitrustlaws are as important as ever. But railroads and oil companies have given way to platform technology companies. Oil and steel have given way to ones and zeros. Today, our economy is dominated by a small number of tech companies that serve as platforms for a digital economy. Just as oil companies and railroads provided amazing bene?ts and opened the doors to new markets, they also functioned as gateways with enormous power. The same holds true for dominant technology platforms. a. In your opinion, what should the DOI be doing to ensure that these markets remain open and competitive? RESPONSE: The Department should be evaluating these industries as it evaluates other industries that is protecting them from anticompetitive mergers and anticompetitive conduct that harms consumers. In addition, please refer tomy answer to your previous question which I believe is relevant. 5. i have also spoken about the issue of whether merger conditions work. One issue is that we have little information after the fact. I have proposed requiring parties to provide information after their transaction closes, so that the antitrust agencies can gauge the effectiveness'of remedies in real time. a. Do you have any thoughts on this idea? RESPONSE: I agree with you that having a good analytic understanding of the effectiveness of previous merger enforcement actions would help improve future enforcement. I have not studied this issue, but if con?rmed and presented the opportunity, I look forward to studying it. 20 QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE AN TITRUST DIVISION QUESTIONS FROM SENATOR FRANKEN 1. In January, after and Time Warner continued that they would structure their proposed acquisition to circumvent FCC review, 12 of my colleagues and I asked the companies to send us the public interest statement that they would have had to send to the FCC. Their response did little to address my concerns and instead was so bold as to state that the deal raises no anticompetitive concerns because it is vertical in nature. Top execs from and Time Warner wrote, ?[the government] typically permits such mergers to proceed, imposes conditions to address any competitive risks, and narrowly tailors those conditions to avoid undermining the mergers? consumer benefits. Yet this merger presents no such risks at all.? We?ve seen the risks before, and we?ve seen how successful merger conditions have been in the past. In the years since the Comcast~NBCUniversal deal was completed a deal that you lobbied for the Combined company has faced complaint after complaint for engaging in anticompetitive behavior and not complying with conditions that the FCC and DOJ imposed on that transaction. a. Mr. Delrahim, without commenting on the pending transaction speci?cally, do you subscribe to the view that vertical mergers aren?t cause. for concern by antitrust regulators? And just because vertical deals have been approved in the past, do you believe that that means that all future vertical transactions should also be approved? b. And to what extent do you think the Antitrust Division should consider the enforceability of behavioral conditions and other remedies when determining whether to challenge a proposal? RESPONSE: As a general matter, while antitrust law traditionally has recognized that horizontal mergers potentially have a more direct effect on competition since they involve direct competitors, in certain circumstances vertical mergers indeed also can raise competitive concerns. I think every transaction should be reviewed based on its particular facts and circumstances. Thus, just because a transaction or particular types of transactions have been approved in the past does not mean that they could not raise competitive concerns in the future. With respect to remedies, as a general matter, I tendio believe structural relief has many advantages over behavioral relief when antitrust law enforcers are considering whether and how to remedy a competitively problematic transaction. Evaluating the enforceability of any behavioral conditions should be an important consideration in determining the appropriateness of such a remedy. 2, I?d like to highlight something you once said with respect to media consolidation. At a 2003 speech before the Recording Artists? Coalition, you said, ?media mergers do get somewhat 21 more public attention than other mergers because media is regarded as important to the functioning of a democracy. As a result, there has also been a fair amount of discussion of whether media deals should get a higher, or at least different, level of antitrust scrutiny.? I agree that any further media consolidation that could impact the free flow of information deserves the highest level of scrutiny. Allowing a select few corporations to pick and choose the content available to everyday Americans would absolutely threaten the basic principles of our democracy. a. Mr. Delrahim, can you tell me what side of the discussion you referenced that you fall on? In other words, setting aside whether media mergers require a different standard, do you agree that the First Amendment and democracy should inform merger analysis in cases of media consolidation? RESPONSE: I agree with you that media consolidation is an important public policy issue. When assessing media mergers the Division is obligated to follow the dictates of Section 7 of the Clayton Act, which provides that mergers that may tend substantially to lessen competition violate the statute. Typically, there is more likely to be antitrust concern about the competitive effects of a proposed merger in markets with a. limited number of competitors. Thus, antitrust enforcement in those markets preserves additional competitors in the market. More competitors in the market often, but does not necessarily, equate with First Amendment values. For example, it likely, but not always, would be the case that Division enforcement under Section 7 of the Clayton Act to preserve competition will have the effect of preserving a diversity of media viewpoints. Also, as more programmers and media outlets compete for advertising and viewers, the likely result will be more diversity of programming choices. Additionally, as media technology improves, the likely resalt will be greater Opportunity for diversity of programming. 3. The Open internet is one of the most competitive marketplaces the world has ever seen, and the Antitrust Division needs someone who understands that net neutrality is the reason why. Because of net neutrality, an email from my constituent in rural Minnesota reaches me as quickly as an email from my bank. Because of net neutrality, the website for my local pizza parlor loads as quickly as the website for a national chain. Because of net neutrality, I can stream videos of my grandchildren just as easily as I can stream a hit TV show. Should Chairman Pei move forward with his plan to undo the Open Internet Order, eyes may turn to the FTC and Antitrust Division to protect competition on the internet. But I don?t think antitrust law alone can adequately protect the open internet. a. Mr. Delrahim, what do you think? What role should the Antitrust Division have in protecting net neutrality? b. Can you tell me then whether you agree that the FCC provides the 1303 with important industry expertise on matters of telecommunications and media . competition? . c. And do you think that the nation?s antitrust laws can address all the objectives of strong net neutrality rules? 22 d. Mr. Delrahirn, during your time lobbying Congress on behalf of Comcast, did you ever lobby on the issue of net neutrality? RESPONSE: To the extent that firms with market power take anticompetitive exclusionary actions to limit competition on the internet, the Antitrust Division can and should use the antitrust laws to protect that competition. It would not be appropriate to utilize the antitrust laws to reach objectives beyond protecting competition. While I have not been at the Antitrust Division for a number of years, during my time there the staffs of the FCC and Antitrust Division often communicated providing each other with insights and expertise. I expect that practice has continued and think it is valuable. With respect to my past representation of Comcast, it did not extend to issues associated with net neutrality nor its merger with UniverSal. 4. In the past, the FCC and have shared jurisdiction over media consolidation deals. This complementary jurisdiction is important because it ensures review by the technological experts at the FCC, who may be better equipped to understand how such a deal will impact Americans? access to affordable and essential telecommunications services. It also enables the FCC to take part in crafting behavioral conditions aimed at remedying harms that the finalized deal might pose to competition and consumers. a. Would you say that?s a fair description of the overlapping jurisdiction? The FCC has also had a critical role in ensuring merging companies are held accountable for the benefits that they argue their deal will bring. For example, in its review of Charter?s proposed acquisition of Time Warner Cabie, the FCC recognized that many of the companies? claimed benefits of the deal w? such as interact speed upgrades and network buildout conunitments were not transaction?speci?c, meaning they were things the companies could already do with or without the merger. So, when the FCC ultimately approved the deal, it ensured that the parties made a commitment to actually follow through on those claimed bene?ts a commitment that is now legally enforceable by the FCC. So let?s quickly talk about and Time Warner. In January, after and Time Warner con?rmed that they would structure their proposed acquisition to circumvent FCC review, 12 of my colleagues and I asked the companies to send us the public interest statement that they would have had to send to the FCC. While the Companies were silent as to whether the deal would actually result in lower prices for consumers, they did discuss a number of consumer bene?ts that they say will arise out of their deal including more relevant advertising and social media sharing opportunities. The companies also suggested that one major bene?t of the acquisition is that it will strengthen their incentives to invest in the deployment of wireless broadband speci?cally 5G. Ultimately, they say, this will promote competition in the broadband industry by allowmg them to compete head-to-head with cable. b. Setting aside whether wireless deployment would in fact be a merger-specific bene?t in the case of proposed acquisition of Time Warner, how would the DOJ without the assistance and enforcement capacity of the FCC hold a telecommunications provider accountable for such a commitment? Or, can you tell 23 me assuming you cannot discuss the pending transaction is it appropriate for the Antitrust Division to consider stated bene?ts of a deal and Whether they outweigh the substantial harms if there is no way to ensure that a combined company actually acts to achieve such bene?ts? RESPONSE: It would not be appropriate to discuss any merger currently pending before the Antitrust Division. Knowing of your keen interest in this area, I would like to note that in evaluating all transactions, it is important for antitrust enforcers to consider both the bene?ts and the harms of the deal, including the important question of Whether, given the merger, the bene?ts alleged would, in fact, be realized and are merger-specific. With respect to shared jurisdiction, in a wide variety of markets the Antitrust Division talks to experts in particular industries to understand the implications of the merger and that can be and has been aCcomplished Without overlapping jurisdiction. . In the past, I?ve expressed concerns about intemet giants that use their positions as dominant platforms to sti?e competition and may be as a result inhibiting the free ?ow of information. In recent years, we?ve heard countless allegations of online intermediaries leveraging their market dominance to the detriment of content creators and innovative startups. And even more recently, we?ve seen how large of a role they play particularly Goo gle and Facebook in shaping Americans? access to the news. a. What would you do to address allegations that these dominant platforms? unilateral behavior is anticompetitive and may ultimately harm the free ?ow of ideas and content? b. In the past; the FTC investigated Google?s behavior in the search and online advertising markets, and it reviewed Apple?s treatment of its competitors in the music streaming market. Can you explain how you believe the FTC and DOJ share authority over these online platforms? And do you think that the agencies? past divisions of responsibility should be maintained going forward? RESPONSE: To the extent that companies with market dominance take anticompetitive actions to sti?e competition, vigorous and timely antitrust enforcement is appropriate. If credible allegations of antitrust law violations are made, such allegations will be investigated if I am con?rmed. The FTC and Department of Justice share certain antitrust jurisdiction over merger and civil nonmerger matters in many, but not all industries. For example airline and telecommunications mergers are subject to the jurisdiction of only the Department of Justice. Over the years the two agencies have developed a clearance process to ensure that only one agency reviews particulartransactions or conduct. If I am con?rmed, I will work closely with the Federal Trade Commission to review past divisions of responsibility and ensure that future divisions of responsibility between the agencies are both appropriate and efficient. 24 l. QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR COONS I believe that strong intellectual property'protection promotes American innovation. At times, I have been concerned that our antitrust enforcement has not struck the proper balance between promoting competition and incentivizing innovation. What is your view on how these two interests should be balanced? RESPONSE: As a registered patent attorney, I have a deep background and interest regarding the intersection of intellectual property and antitrust. Intellectual property rights are a form'of property and recognized in the US. Constitution. I feel strongly that an intellectual property owner?s rights need to be respected and protected. It is my View that the intellectual property laws combined with the proper enforcement of antitrust laws together form the basis of our successful innovation policy. At the same time, antitrust enforcers have a legitimate role in ensuring that intellectual property rights are not abused in violation of the antitrust laws. In 2015, I wrote then~Attorney General Holder and Assistant Attorney General Baer regarding the request of the Institute of Electrical and Electronics Engineers Standards Association for a Business Review Letter trom the Antitrust Division on patent policy changes that it proposed to adopt for the licensing of standards~essential patents. lwas concerned about the potential impact on the competitiveness of American innovators and the US. economy if the U. S. was seen as endorsing an approach that I believed inappropriately devalued certain patents, and indeed we have seen this Business Review Letter used against US. companies in anti-monopoly investigations around the world. a. What do you believe is the appropriate role of the Antitrust Division in relation to the licensing of standards essential patents? b. How would you ensure that US. regulators take into account potential impacts of their actions on antitrust investigations abroad? RESPONSE: I think it is important for U.S. of?cials to appreciate the potential impacts of their actions domestically and globally. The area of licensing standards? essential patents is one that has recently engendered litigation and commentary. The appropriate role for the Antitrust Division, in my view, is to ensure that a property owner?s rights are respected and protected while, at the same time; ensuring that IP rights are not abused in violation of the antitrust laws. The application of the antitrust laws must not illegitimately sti?e creators or innovation by condemning pro?competitive activities that would maximize incentives for investments or efficiency?maximizing business arrangements. Antitrust enforcers should also strive to eliminate as much as possible the unnecessary uncertainties for innovators and creators in their ability to exploit their intellectual property rights, as those 25 uncertainties can also reduce incentives for innovation. Only when the holders of intellectual preperty rights go beyond the legitimate exercise of these rights should antitrust laws be used to constrain their activities, and only then in a manner that is based on sound economic policies. 3. At times during the campaign, the President made comments about ongoing antitrust reviews that made me concerned that there would not be the same level of political independence we have come to expect in these reviews. a. How will you ensure that decisions with respect to high?pro?le transactions are shielded from undue political in?uence? b. Have you made any assurances to the President, Vice President, or any administration of?cials that you will make determinations in line with the President's desired outcomes? RESPONSE: I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, Without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies,- and that political considerations do not in?uence the handling of particular cases. 26 QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR CRAPO For companies to accurately assess the potential regulatory risks to a proposed transaction, it is important that they know they will receive consistent and fair treatment before Whichever Federal agency reviews their transaction. Otherwise, potential regulatory uncertainty may cause companies to decide not to proceed even though the transaction is pro-competitive and would bene?t consumers and the economy through increased investment and job creation. 1. If con?rmed to serve as an Assistant Attorney General, will you ensure that the Antitrust Division at the Department of Justice conducts fair and transparent merger investigations? RESPONSE: Consistent and fair treatment of companies proposing transactions should be a hallmark of law enforcement and; if con?rmed, I will strive to ensure the Antitrust Division achieves that goal in all of its reviews. I agree that regulatory uncertainty has the potential to deter or delay procompetitive transactions. The Antitrust Division has for many decades published Merger Guidelines to help reduce uncertainty for companies seeking to merge and I believe those guidelines provide a useful framework for merger reviews. 2. Will you work to ensure that that the standards and procedures used by the agency to evaluate a transaction are applied consistently? RESPONSE: I agree that the standards and procedures used by an agency should be applied consistently. If con?rmed, I Will pursue such consistency. 27 QUESTIONS FOR THE RECORD MAKAN DELRAHIM NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR BLUMENTHAL Airlines 1. As a result of numerous horizontal mergers, just four airlines control 80 percent of ?ights within the United States. This lack of competition reduces incentives for airlines to be responsive to customer concerns as the now~famous Video of a customer being dragged off a United Airlines ?ight only con?rmed. a. Would you agree that the airline industry is over-concentrated? b. What can antitrust enforcers do abbot it? 0. Do you believe the DOJ should review past decisions if the conclusions about merger?s impact on competition prove to be incorrect? RESPONSE: Competition throughout the economy helps consumers reap the bene?ts of innovative, high~quality products and services at the lowest prices. Competition is particularly important in the airline industry, with so many American consumers traveling by air. In the airline industry, competition can take place in particular citynpair markets, some of which may have signi?cant concentration, While others have multiple competitors, resulting in vigorous competition. Antitrust enforcers need to be vigilant in ensuring competition in the airline industry and fully scrutinize conduct and proposed mergers that diminish competition. I think it is important to understand the effects of past decisions to identify anticompetitive conduct that harms consumers and also to inform future enforcement. Conditions 2. Antitrust regulatorsreviewing a proposed merger have three options: let the merger proceed, sue to block the merger, or allow the merger to proceed under certain conditions. Conditions imposed under the third option may range from requiring the new company to sell some of its assets to imposing speci?c limits on the new company?s behavior. However, market forces or . the limited enforcement bandwidth of antitrust agencies often limits the effectiveness of these behavioral conditions, sometimes leaving consomers to face a more concentrated market that provides worse quality at a higher prices, especially if those conditions are violated with impunity. a. What is your view of how merger conditions should be imposed? b. Can you name a merger for which conditions were not imposed but you believe they should have been? 0. Can you name a merger for which conditions were imposed but you believe they should not have been? 28 d. Can you explain, in general, when you would reject suggested merger conditions and what you would do instead? RESPONSE: As a general matter, I tend to believe structural relief has many advantages over behavioral relief when antitrust law enforcers are considering Whether and how to remedy a competitively problematic transaction. I do not have the information and analytical data the agencies had before them in making individual determinations in past cases and therefore cannot judge the propriety of those decisions or whether conditions should or should not have been imposed on particular past mergers. Each case presents unique facts and circumstances that need to be taken into account in making any particular enforcement decision. As I noted above, I generally favor structural relief, where possible, over long-term behavioral relief. Cooperation with State Attorneys General 3. Historically, State Attorneys General often work with the Department of Justice to enforce both state and federal antitrust laws. a. If you are continued, will you commit to cooperating with State Attorneys General, including sharing relevant information with State Attorneys General should they seek it? b. If I hear from one or more State Attorneys General that they haVe not received a response from your of?ce about an antitrust matter, will you assure me that you will provide a response should I seek one? RESPONSE: I believe it is bene?cial to both the federal antitrust agencies and the states to cooperate in enforcement actions, including sharing relevant information where lawful and appropriate. If con?rmed, I will commit to cooperating in appropriate cases with my state attorney general colleagues. As part of that cooperation, I can assure you that communications from the AntitrustDivision will be timely and responsive to the extent information can be shared consistent with any constraints on sharing such information. Transparency 4. During the presidential campaign, then?candidate Trump objected to proposed merger with Time Warner, arguing that CNN?~which is owned by Time Warner?has been unfair to him. Since President Trump made that statement, he has met with the CEO of Separately, Jared Kushner has reportedly met with top Time Warner executives and complained about news coverage.? a What will you do to ensure that there is no political interference with your work, from the President and his associates or otherwise? b. Will you commit that if President Trump or anybody working on his behalf contacts you about a pending antitrust matter, you will inform the American people of that contact and make its contents of that communication public? '29 RESPONSE: I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not influence the handling of particular cases. 4. On January 27, 2017, White House Counsel Donald McGalm issued a memo entitled ?Communications Restrictions with Personnel at the Department of Justice.?1 The ?rst section of that memorandum details limitations on discussions between the White House and the Department of Justice regarding ongoing or contemplated cases or investigations a. Are you aware Of this policy? b. Have you undergone any guidance or training on this policy? 0. Do you agree that it would be inappropriate for a White House employee to communicate with the DOJ about a speci?c pending antitrust enforcement or litigation action? d. Do you agree that it would be inappropriate for a White House employee to direct the DOJ not to ?le a lawsuit in a contemplated case or to continue an investigation? e. Are you familiar with any other policies currently in place that limit or otherwise address communications between the White House and all other law enforcement agencies, including those policies that affect active cases, contemplated cases, or investigations? What are those policies? f. Do you agree that imposing limitations on this type of communication between the White House and law enforcement agencies is important for the integrity of our nation?s justice system? RESPONSE: I am aware of the White House Counsel?s memo entitled ?Communications Restrictions with Personnel at the Department of Justice.? As you note, this policy includes guidance limiting discussions between the White House and the Department of Justice regarding ongoing or contemplated cases or investigations. The White House Counsel?s Of?ce, through its ethics compliance program, provides training for White House staff. As stated in the policy, it was issued to ?ensure the DOJ exercises its investigatory and prosecutorial functions free from the fact or appearance of improper political influence.? Under the policy, White House staff are required to coordinate and clear with the White House Counsel?s Of?ce any communication with the DOJ on pending or contemplated investigations or enforcement actions and such communications are made only through certain designated senior officials at the DOJ. I believe that it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without 1 Memorandum to All White House Staff: Communications Restrictions with Personnel at the Department of Justice, available at: 3O regard to political considerations. Contacts from the President or the White House must comply with applicable Department policies and guidance. It is important to ensure that all antitrust investigations comply with these policies, and that partisan considerations do not in?uence the handling of particular cases. 6. Please provide your opinion on the following recent mergers, including answers to the speci?c questions listed for each. a. American Airlines and U.S. Airways This merger was approved with the condition that the merged company had to divest landing rights at key airports across the country. i. In your view, was this condition suf?cient to protect consumers? ii. Is there anything that you would have done differently regarding approval of the merger, such as imposing additional conditions? b. United Airlines and Continental Airlines - This merger was approved only under the condition that the takeoff and landing rights for Newark Liberty Airport were transferred to Southwest. i. In your view, was this condition suf?cient to protect consumers? ii. Is there anything that you would have done differently regarding approval of the merger such as imposing additional conditions? 0. and DirecTV~ This merger was cleared by the DOJ without conditions; the FCC later imposed its own restrictions on the deal. But the Department of Justice concluded that there was no signi?cant risk to competition. i. Do you agree with this outcome? ii. Is there anything that you Would have done differently regarding approval of the merger such as imposing additional conditions? d. and Mobile? This merger was ultimately abandoned by the companies after the and the FCC opposed the deal. i. Do you think this merger should have been approved? ii. Is there anything that you would have done differently regarding the Department of Justice?s handling of the merger? e. Time Warner Cable and Comcast This merger was abandoned after the Department of Justice expressed concerns that Comeast would become the gatekeeper for Internetwbased services. . i. Do you think this merger should have been approved? ii. Is there anything that you would have done differently regarding the Department of Justice?s handling of the merger? RESPONSE: With respect to each of the past merger decisions referenced above, I was not privy to the confidential information and analytical data the Department had in its possession at that time, and therefore am not in a position to comment. I can say that I have tremendous respect for the individuals who have served the American public in leadership roles and the career civil service staff at the Antitrust Division. Vertical Mergers 31 7. As you know, a vertical merger is a merger between two companies in different points in the supply chain and do not compete directly against each other. For example, when a widget manufacturer buys a Widget distributor, this is a vertical merger. Some economists believe that vertical mergers are always good for consumers. However, others have raised concerns that this kind of merger can increase companies? incentives and abilities to reduce competition and raise prices a. Do you believe that vertical mergers can present competition concerns? b. If so, please describe the factors that you believe the DOJ ought to scrutinize particularly carefully when reviewing vertical mergers. RESPONSE: I think the majority of antitrust scholars recognize that most vertical mergers raise less serious competition concerns than horizontal mergers, which bring together firms competing directly against one another. One reason is that certain vertical mergers can create ef?ciencies that bene?t consumers in a way that horizontal mergers may not. At the same time, there are instances Where a vertical merger may have anticompetitive effects. As with any potential enforcement action, it is therefore important to carefully and closely assess the facts to determine Whether there is, on balance, a harm to consumers ?owing from the proposed transaction. The vertical mergers most likely to require a close look by government enforcers are those where there is risk that either upstream or competition may be foreclosed by the transaction. fMal?ket Scrutiny 8. Every potential merger presents a unique set of circumstances, including the industry in which the merger is taking place. Some industries have a history of questionable conduct, in some cases because a structural characteristic of the industry makes collusion or other abusive practices a tenable strategy. Separately, some industries implicate fundamental rights. For example, concentration in the marketplace for news doesn?t just undermine the American economy, it undermines American democracy. Concentration in the marketplace for health care or health insurmice denies Americans access to a commodity health care - that is and ought to be a basic human right. a. in your View, are there any industries that require a greater level of scrutiny by the Department due to these or related factors? b. Speci?cally, do you believe there are industries with a track record of questionable . behavior in the marketplace that merits additional scrutiny for example, industries in which there are high barriers of entry, monopoly?like tendencies, or concentrated geographical areas? 0. Do you believe that there industries in which consolidation may present a threat to core fundamental rights? i. Speci?cally, do you believe that media consolidations may merit additional scrutiny for this reason? ii. Do you believe that health industry consolidation may merit additional scrutiny for this reason? 32 d. The University of Chicago recently hosted a conference that discussed whether there is a concentration problem in America. What do you think the answer to that question is? RESPONSE: It is certainly relevant for antitrust enforcers to understand the history of an industry, especially when that history involvesprevious antitrust law violations. The structural characteristics high entry barriers) of an industry are also relevant to evaluating conduct and mergers under the antitrust laws. I believe that antitrust enforcers should be keenly aware of industries that affect American consumers in their everyday lives, such as health care and media. I did not attend the University of Chicago conference and I am not familiar with the discuSsions they held. I do believe that antitrust analysis is typically very fact based and focuses on particular markets. That said, when there is high concentration associated with a particular matter under review, closer scrutiny of the conduct or merger being reviewed may be appropriate. Sherman Act Section Two 9. Over the last few decades, there has been a trend toward narrowing the scope of liability under Section 2 of the Sherman Act, and the Department of Justice and Federal Trade Commission have brought only a handful of cases under this law in recent years. The cases of US. v. Microsoft and US. 1). demonstrated how important this law and people willing to enforce it are. As we see even more modern technologies, platforms, and complex intellectual property issues, Section 2 may be one of antitrust?s most important tools for protecting comp etition. a. Do you believe that Section 2 can be used effectively to address harmful conduct that is the product of high levels of concentration? b. Will you commit to actively and aggressively using Section 2when warranted and appropriate as one of the tools available to the Justice Department to protect the competitive process and bene?ts for consumers? RESPONSE: I believe that Section 2?s prohibitions on anticompetitive ?monopolization and attempted monopolization are an important component of the nation?s antitrust laws. If con?rmed, I will support the Antitrust Division?s efforts to enforce Section 2 actively and aggressively when warranted and appropriate to protect competition and consumers. Online Platforms 10. Many large online platforms, in addition to providing access to users and a marketplace for suppliers, operate a variety of innovative health, content, banking, and other services themselves in direct competition with other suppliers. a. What should be done to ensure that these online platforms, which act as general Internet gatekeepers, don't discriminate in favor of their own services to the detriment of robust competition and innovation? 33 RESPONSE: The antitrust laws cover unilateral and coordinated conduct in industries throughout the economy, including companies operating on the Internet such as online platforms. Over time, these laws have proven effective and adaptable to various types of anticompetitive conduct even as industries have evolved and technology has created new markets. If I am con?rmed, the Antitrust Division will investigate and vigorously enforce the antitrust laws with respect to online platforms as I would in any industry, based on the economic and analytical tools appropriate to the circumstances and to ensure robust competition and innovation. ll. Internetwbased platforms are highly valuable as well as extremely powerful, as they can often serve as both an operating system and a storefront for online services. Without safeguards, however, these tech platforms can create anticompetitive obstacles for rivals and tip the scales in an already sensitive market. a. What are the existing laws and guidelines that govern the competitive behavior of internet-bas ed platforms and how they operate in the market? b. Can dominant platforms treat themselves differently than rivals or impose obstacles that keep rivals from competing? RESPONSE: Section 1 and Section 2 of the Sherman Act govern the competitive behavior of businesses throughout the economy, including Internet?based platforms. Those laws prevent companies from engaging in conduct that harms competition without appropriate justi?cation. Whether any particular conduct is an antitrust law violation will depend on the facts and circumstances surrounding the conduct. As a generai matter, however, platforms with monopoly power may not engage in exclusionary conduct that harms consumers in violation of the antitrust laws. Wages and Labor Conditions 12. Last year, the Obama administration called on states to take steps to reduce the use of non- compete contracts. The Department of Justice and the Federal Trade Commission also released guidance for human resources departments to identify wage collusion and announced that all such incidents of wage collusion would be criminally investigatedz a. Will your Department continue efforts to monitor and bring charges against wage collusion? b. Will you pledge to continue and strengthen the previous Administration?s to prevent employers from colluding to set wages and labor conditions, including but not limited to scrutinizing the use of non~compete contracts? RESPONSE: If I am confirmed, the Antitrust Division will continue its efforts to prevent employers from colludiug to set wages or engage in illegal antispoaching agreements that hurt AmeriCan workers. Companies that compete for workers that agree to end that competition by reaching an illegal agreement on the amount of The White House, ?Fact Sheet; The Obama Administration Announces New Steps to Spur Competition in the Labor Market and Accelerate Wage Growth,? October 25, 2016, available at of? (so/20 34 wages they offer violate the antitrust laws and should be subject to full and vigorous antitrust condemnation. Enforcement of Remedies and Consent Decrees 13. The strict enforcement of remedies is crucial to the work of the Antitrust Division. Currently, the Of?ce of the General Counsel evaluates and oversees adherence to those remediess But with the advancement of data capabilities and technological innovation, proper oversight is only growing more challenging4 For example, the rise of algorithmic pricing and machine learning is bringing new dynamics to antitrust laws a. What will you do to ensure that enforcement of conduct remedies and consent decrees is implemented effectively and consistently? RESPONSE: I believe it is important to ensure that companies are abiding by the commitments they made in the Division?s consent decrees and will be aggressive to ensure they are doing so. 3 US. Dep artment of Justice Antitrust Division, Anxious: Division Manuel, April 2015, available at 4 John Kwoka, Mergers, Merger Control, and Remedies: A Retrospective Analysis ofU.S. Policy. 5 David ?Poiicing the digital cartels, Price-setting algorithms mean regulators must now tackle collusion among machines? Financial Times, January 8, 2017, availabie at 1e6- 864f?20dcb3 Seedel; eny Useem, ?How Online Shopping Makes Suckers of Us All? The Atlantic, May 2017. available at all/52144291 35 QUESTIONS FOR THE RECORD MAKAN DELRAHIM .- NOMINEE TO BE ASSISTANT ATTORNEY GENERAL OF THE ANTITRUST DIVISION QUESTIONS FROM SENATOR HIRONO 1. President Trump has met With the CEO of as well as those of Bayer and Monsanto. These companies have pending mergers subject to review by the Antitrust Division. El. b. Should the President have such meetings and should he attempt to involve himself in these mergers? Should the President disclose transcripts of his meetings with the CEOs of companies with mergers subject to US government approval? How can you ensure that the Antitrust Division will be independent from the White House when evaluating and investigating merger activity so as to uphold America?s antitrust laws? Will you pledge to disclose any White House contacts on pending or potential antitrust matters? Given concerns about the President discussing his disapproval of speci?c companies, including his opposition to the AT&T~Tirne Warner merger in particular, during his campaign, as well as about White House interference with the Department of Justice, what steps Will you take to ensure a fully independent Antitrust Division? RESPONSE: I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, Without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not in?uence the handling of particular cases. 2. Sinclair Broadcast Group?s proposed merger with the Tribune Media Company would giVe Sinclair stations in 42 cities, expanding its reach to a total of 108 communities. This merger has raised questions about media concentration as the combined company would serve close to three?quarters of US. households. in the past, Sinclair has drawn criticism for programming that bene?tted then Republican presidential candidates Donald Trump and George W. Bush. Given reports of the President?s continued attacks on the press, including reports of his threats to jail journalists, it imperative that consumers retain access to a diversity of news sources. Not only can concentration in the media can lead to higher prices, but concentration can have the effect of limiting the number or diversity of vieWp oints in a media market. Should consideration of effects like these be considered by the DOJ when examining a media merger? How? 36 RESPONSE: It would be inappropriate for me to discuss a pending merger. As a general matter, however, I agree with you that media consolidation'is an important public policy issue. When assessing media mergers the Division is obligated to follow the dictates of Section 7 of the Clayton Act, which provides that mergers that may tend substantially to lessen competition violate the statute. 3. Regarding the Warner merger, you?ve commented that you didn?t believe it posed a ?maj or antitrust problem.? What speci?cally did you mean by that? And do you believe that by nominating you to head the Antitrust Division, the President is endorsing your View and that, despite his claim on the campaign trail, he won?t act to stop the merger? RESPONSE: As a general matter, antitrust law traditionally has recognized that horizontal mergers potentially have a more direct effect on competition since they involve direct competitors, than do vertical mergers and my comment was pointing out that understanding. I have had no conversations with the President regarding this merger. Nor have I been privy to the information currently being reviewed by the Antitrust Division. No one should infer from my comment that I have any preordained outcome in mind for this merger investigation, or was privy to any information necessary for a complete antitrust analysis. I think every transaction should be investigated and analyzed based on its particular facts and circumstances. 4. If con?rmed, you will oversee the proposed merger of Monsanto and Bayer. Many small farmers in Hawaii are concerned about the potential increase in costs for inputs, such as seed and fertilizer, that this could cause. In January, the CEOs of Monsanto and Beyer reported in a joint statement that they had a ?very productive meeting? with the President about the merger, a. Has the President discussed the Monsanto-Bayer merger with you? b. Do you know What was said in the meeting between the President and the CEOs of Monsanto and Bayer? 0. Soon, only three companies could control the entire agrochemical market, as opposed to the six that controlled most of the market in 2013. If only a fewr companies own the patents for seeds, this may be good for their shareholders, but small farmers could become completely dependent on them. Do you believe that this consolidation will harm small Hawaii farmers? RESPONSE: I have not discussed this merger with anyone at the White House and I have no knowledge of anything that was said in the meeting your question references. Moreover, it would be inappropriate for me to discuss any pending merger investigation. I can say that the agricultural sector, including farmers, is important to the nation?s economy, and I commend your and Chairman Grassley?s vigilance in oversight of competition issues in this sector. 5. Last year, Aetna announced it would be pulling out of Affordable Care Act Exchanges in eleven states less than a month after the Administration announced it would sue to block their merger with Humane. In January, US. District Court Judge John Bates found that Aetna?s public claims about their reasons for pulling out of the Exchanges were largely untrue, that 37 thewithdrawal was retaliatory, and that Aetna?s methods to conceal their process for deciding on withdrawal were done in a manner ?speci?cally to evade judicial scrutiny.? If - con?rmed, how would you address a case like this? Would this kind of pressure by a company?wimproperly using political leverage?"impact your decisions and approach to mergers? RESPONSE: I believe it is essential that all investigations conducted by the Antitrust Division are initiated and conducted in a fair, professional, and impartial manner, without regard to political considerations. Contacts from the President or the White House must comply with Department policies, including a 2009 memorandum by Attorney General Eric Holder. It is important that all antitrust investigations comply with Department policies, and that political considerations do not in?uence the handling of particular cases. . In a February court hearing regarding the Anthem-Cigna merger, Anthem?s lawyer repeatedly implied that the merger would be cleared under the new Trump administration?s Department of Justice. He said: think it?s important for the Court to understand that there are at least two pathways to a closing here. One is through appeal and the other is through resolution with a new DOJ. And the motion is intended to preserve those options, primarily.? The American Medical Association subsequently wrote a letter to the Acting Assistant Attorney General for the Antitrust Division to express its ?alarm? regarding these statements and stating its belief that ?political in?uence should play no role in the enforcement of antitrust laws.? At the end of April, the US. Court of Appeals for the D.C. Circuit ruled that the lower federal court did not abuse its discretion in preventing the two health insurers from merging. a. Should politics play a role in the application of antitrust laws? b. You lobbied on behalf of Anthem in its ongoing effort to merge with Cigna. Do you think your past relationship caused them to view the Trump administration as likely to be more favorable to them? c. In 2812, you said that lobbying Congress on antitrust regulation could be effective, saying not a single assistant attorney general or FTC chair past or present that would admit he or she didn?t care about or at least didn?t listen to what members of Congress told them. They are always going to listen.? Is this the advice you gave Anthem? d. In your questionnaire, you said that you are ?recused from any further involvemen in the Anthem?Cigna merger. What specific steps will you take to ensure that you will fully recuse yourself from the matter, and how will you avoid the type of influence you highlighted in your 2012 comments? RESPONSE: It is my understanding, according to press reports, that Anthem announced on May 12 that it was abandoning further efforts to complete the contemplated merger with Cigna. To the extent this matter is still active, I will recuse myself and follow the Department and Antitrust'Division?s policy of informing all appropriate personnel of my recusal. There. should be no political in?uence in antitrust law enforcement decisions. I cannot speak to any motivations or considerations that Anthem?s representatives had in making particular arguments 38 that were developed well after my representation of the company ended. My advice to Anthem was consistent with my advice to other clients that they should present the bene?ts of their transaction to a variety of people and groups thatwere interested in the effects of the transaction. 7. For years, US businesses and their mergers have been targeted for antitrust prosecution abroadwoften in cases where the US agencies have decided that there is no antitrust concern. a. Do you think that this is a problem that the Antitrust Division should address and, if so, how would you engage with foreign jurisdictions on this issue? b. in some cases, US companies and their mergers have faced foreign antitrust reviews that appeared motivated by a desireto protect local competitors, or by other non- antitrust industrial policy considerations. How can the US help encourage antitrust enforcers to focus their efforts on protecting competition, rather than helping competitors or satisfying other political considerations? RESPONSE: I ?rmly believe that antitrust laws should not be misused by foreign authorities to defend their national businesses or to try to exclude American businesses from foreign markets. The underlying basis for all antitrust actions, in the United States and elsewhere, should be apprOpriate legal and economic analysis. I understand that the Antitrust Division communicates this message to the international community in a number of ways. When I was a Deputy Assistant Attorney General at the Antitrust Division, one of my primary responsibilities was representing the Division?s international affairs. In that capacity, I advocated strongly for foreign enforcers to apply sound, competition?based principles in their own enforcement efforts. If I am con?rmed as Assistant Attorney General, I will support the continuation and strengthening of those contacts as well as exploring additional avenues to ensure American businesses and consumers are not harmed by discriminatory antitrust enforcement by foreign antitrust authorities. 39 CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 CQ CONGRESSIONAL TRANSCRIPTS Congressional Hearings Dec. 7, 2016 Final 10f71 - 7/7/2017 11:22 AM CQ.com Senate Judiciary Subcommittee on Antitrust, Competition 82?3&printzt1?ue . Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights Holds Hearing onthe - Time Warner Transaction MST QF PANEL. MEMBERS AND LEE: Welcome to the Subcommittee on Antitrust, Competition Policy and Consumer Rights. Before we start, I'd like to thank Ranking Member Klobuchar and for her staff in preparing for this hearing today. I'd also like to thank the chairman of the full committee, Senator Grassley, for his support for the hearing. After I and Senators Klobuchar, Grassley and Leahy give their opening remarks about this hearing, we will hear from our panel of witnesses. And I will introduce those witnesses shortly, and then we will have seven-minute question rounds from members of the subcommittee. We're living in what some might describe as sort of a golden age of television. One TV writer recentiy commented that "for the first time, I?ve begun to feel like there may in fact be too much good if that were possible. From "Game of Thrones" to "House of Cards," and so many other programs across so many television networks and so many different platforms, the quantity and quality of programming content may well be greater today than it ever has been in the past, or ever could have been predicted. The creativity, however, is not limited to content creators. Networks and distributors are also innovating to allow consumers new and unprecedented access to their content of choice. No longer are consumers limited to whatever bundle their local cable operator might have put together for them. DISH, Sony, and DirecTV all offer cabte bundles allowing consumers to stream live television over the internet. Net?ix, Amazon, HBO, CBS, among others, allow consumers to purchase programming directly. And more innovation is on the horizon and coming at us very quickly, as many industry participants expect, 5G wireless technology to provide even more competition to broadband and landline cable, opening up even more possibilities to content creators and to distributors. LEE: This brings us to the very reason why we're here today, to discuss the proposed acquisition of Time Warner by and ensuring this flourishing marketplace for 20f71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 creative content retains its vibrancy regardless of the outcome of this proposed acquisition. is the second largest wireless carrier in the United States and through its -- Direct TV and U-verse (ph) subsidiaries, the largest U.S. cable or sateltite provider. Time Warner is currently the world?s third largest television network and filmed TV entertainment company. In late October, announced that it reached a deal to purchase Time Warner for $85 billion. The proposed transaction would combine millions of wireless and pay television subscribers with Time Warner?s media line up, which inciudes CNN, TNT, HBO and Warner Brothers Film and Television Studio. Now, the companies claimed that this acquisition will result in significant benefits for consumers. The combined company will provide quote, "stronger competitive alternative to cable and other video providers" and quote, ?better value, more choices and an enhanced customer experience for over the top in mobile viewing." Additionally by controlling the customer experience from content creation through distribution, the combined company says it'll be able to innovate its advertising practices and introduce customized or targeted advertising, providing both an approved customer experience and a signi?cant competitor to digital advertising giants like Google and Facebook. This transaction involves no horizontal overlaps. However, if this fact ended (ph) the antitrust analysis, then this would be a very Seinfeldian hearing, a hearing about nothing. Although vertical deals typically raise fewer concerns than do their horizontal counterparts, such deals nevertheless may still tend to substantially lesson competition. The key analysis takes place, of course, under the Clayton Act. The principal concern with vertica! integration is foreclosure or denying access of competing firms to suppliers and customers. A key question thus becomes wiil -- what will the incentives and opportunities be for the combined firm after the transaction takes place? Many critics of the deal have posited that all sorts of potential anti-competitive abuses may take place and that the -- that the combination of Time -- and Time Warner could create, could increase the price of or reduce access to Time Warner content to rival television distributors, there by not only raising its rival's costs, but also making its Direct TV products appear more attractive to consumers. This risk is particularly acute in the nascent (ph) online video services market. Over the past few years, we?ve seen the development of products like Sling and like Play Station View, which allow costumers to watch a live stream of cable channels via their internet connection. And Direct TV has just begun it's own similar service, called Direct TV Now. 3 of71 . 7/7/2017 11:22 AM CQ.co?m Senate Judiciary Subcommittee on Antitrust, Competition ownership of HBO, CNN and the other must-have television products of Time Warner, could give Direct TV Now a significant competitive advantage over its competitors. ownership of these channels could also potentially force Direct rivals into a Hobson's choice of higher prices or limited Time Warner content, knowing that many customers would migrate to Direct TV if its rivals refuse to pay the higher Time Warner prices that they would have to pay in that circumstance. The potential anti?competitive favoritism that the combined firm could bestow on its own products is not limited to price or access, but extends to the quality of the offerings as well. And it's here that we get to the siren song of zero rating, whereby a wireless or broadband distributor excludes particular data from counting towards its customers data consumption caps. Now on it's face, zero rating appears to be customer friendiy, the content is free for subscribers and helps them to avoid having to pay overage when they exceed the applicable data caps. However, critics argue that zero rating transforms internet service providers or wireiess carriers from quote, "relatively neutral conduits into gatekeepers." LEE: The FCC recently expressed concern that zero rating practices, quote, "may obstruct competition and harm consumers by constraining their ability to access existing and future mobiie services not affiliated with Now, critics say that such concerns would only be exacerbated if were able to bring Time Warner content under its fold and under its ownership. However, as the FCC letter itself illustrates, in regard to this merger, we also have a regulatory frame work that's designed at least to minimize, if not to eliminate many of the positive many of the positive anti competitive concerns that have been express. The issues raised by the deal are complicated and like most anti-. trust analysis, particularly most anti-trust analysis ina deal that's this big and that's this complex, they are necessarily very fact intensive. The focus of the analysis should remain on maximizing consumer welfare. And, consumer welfare is in turn maximized when we focus on protecting competition rather than protecting individual competitors from competition. Well, the final determination regarding the competitive impact of the deal, will be made by the Department of Justice. i believe we can make a valuable contribution by closely examining the questions raised by this unique and significant transaction. I lock forward-to hearing from and engaging with our uniquely talented and capable panel of witnesses today, and covering any issues that might come up. Senator Klobuchar, will now give her statement. 4 of 71 7/7/2017 11:22 AM CQ.com Senate Judiciary Subcommittee on Antitrust, Competition KLOBUCHAR: Thank you very much Mr. Chairman. Thank you for holding this important hearing. Like you, my initial statement here started out with examples of these great new offerings and we seem to have the same ideas. I was gonna mention Game of Thrones, or as you once called this hearing, game of phones, right? And, instead I now will switch to west world to show how flexible I am in this new era in Washington. 80, examples of the content we are seeing from a variety of sources. West World, and the Wire to Netflix's House of Cards, to 30 for 30 documentaries. We are seeing critically acclaimed and popular content coming from a wider range of networks and video on demand services, perhaps even more important, we see diverse voices being heard, with networks representing different viewpoints and interests. This has been referred to by both of us as the golden age of television. However, it really is actually not quite accurate, increasingly we stream shows on our computers, tablets and mobile phones rather than simply watching them on televisions. And, consumers are relying on their broadband or wireless connections, instead of their cable connections to receive that content. This competition is increased consumer demand for video content, which is benefited by content creators according to the writer's guild. There were 305 comedy and drama series during the 2015, 2016 season, compared to 204 in 2010 to 2011. Earnings for the guilds writers have grown by almost 50 percent from 570 million to 854 million, in the same time period. But there are problems, and we know what they are, because as U.S. Senators, we hear about them when constituents talk to us on the street or call our offices. The cost of cable television continues to be a burden on too many consumers. According to a report released just this morning, by consumer federation of America, the typical household, which is in America now, two cell phones one land line and video internet bundle, spends about $2,700 per year on these services. When you think of a middle class income, that is a chunk of change. We have seen this plot before, like a tired movie franchise, we can predict the ending before it begins, the promise of thriving competition collapses, replaced by dominant firms with monopoly power. We saw it in radio and television with the development of centralized networks, and finally in cabie with the rise of cable distributors and their local monopolies. This is the central question of this hearing. Will this transaction accelerate the disruptive forces that will increase competition, spur innovation, improve quality and lower costs? Or, is this one step on the road to a few dominant firms controliing content and distribution. 5 0f71 7/7/201711'22 AM . CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition KLOBUCHAR: One school of thought believes that vertical transactions, in which a distributor of content acquires a supplier, rarely, if ever, undermines competition. I reject that approach. Whether an acquisition will harm consumers depends on factual investigation and careful analysis, not ideological presumptions. The federai communications commission and the Anti?trust Division of the Department of Justice have largely followed this practical approach in reviewing mergers and acquisition in this industry. In the interest of American consumers, I hope that the new administration continues that tradition. acquisition of Time Warner combines one of the world?s largest wireless cable and including satellite TV and broadband providers was one of the largest media and entertainment companies. There are three broad questions that I think we need to look at. First, will the vauisition increase incentive and to suppress competition? Various distributors of video content have raised concerns that will increase the prices that a competitors pay for Time Warner content or deprive its competitors of access to that content. Independent content providers raised similar concerns. Will post transaction, favored some content over independent content. If pursued, such tactics could increase the costs that contributors charge consumers or undermine the development of innovative distribution models. Even more troubling, the merger could stipple the diversity of viewpoints and focus offered by independent content providers. Independent contact providers are responsible for much of the innovation and diversity in programming today, but they already face a tough landscape, having to negotiate with large distributors. The second question, will the merger produce benefits? According to the parties and supporters of the transaction, combining programming content with video distribution would allow to develop new innovative offerings for consumers, improve content creation, and allow to better compete with Facebook and Google. I appreciate that just last week, launched DirecTV Now, which allows customers to access DirecTV's programming through the internet. These potential benefits need to be examined, but I want to be clear, if this transaction is found to be anti~competitive, the need to compete with other companies is not a justification. The solution for less competition is not even less competition. Finalty, if concerns exist, would conditions remedy these problems? Conditions have been used in the Comcast, NBC, Universal merger, which shares some similarities with this deal. There is however, disagreement about the effectiveness of those conditions. Further, there's growing skepticism that conditions that attempt 6 of71 CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition to limit a company's conduct can never work. Mr. Chairman, I've received a statement from consumers union articulating their concerns about the transaction. I move that this statement be included in the record. And this is a very transaction, I am glad that we are taking a close look at it today, and I look forward to hearing from the witnesses. LEE: Thank you. Those will be submitted into the record without objection. We're now going to hear opening statements from the chairman and ranking member respectively of the judiciary committee as a whote. This is of course, is a subcommittee of that committee. Chairman Grassley? GRASSLEY: Also, instead of saying at the end, i may have questions for the record because after 11 :00, I may not be able to be here. All right Mr. Chairman, thank you for holding this hearing on the biggest transaction of the year; the proposed Warner merger. This deal would combine one of the nation's largest phone and internet providers with a media entertainment titan that among other things, owns HBO, CNN, TBS, TNT and Warner Brothers Studios. By expandinginto media and entertainment, strengthens its existing wireless and internetand paid TV business, and also becomes a premier content owner. The Justice Department and possibly the Federal Communications Commission will determine whether to approve or reject this merger and decide whether or what conditions should be in order for the parties to precede with the transaction. GRASSLEY: Nonetheless, this committee's oversight responsibilities is an important one where the committee can flush out potential issues and highlight possible impacts of the merger on the market and consumers. It's an understatement to say that this industry is undergoing tremendous change. People are constantly reevaluating what, when and where and how they access the media entertainment and content. Technologies are quickly evolving and delivering platforms are converging. Companies are improving their technology so that customers can enjoy better and 7of71 CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition faster connectivity. Innovation is creating more options and allowing for multiple combinations. The creativity or programming content and device apps is flourishing to satisfy any and every consumer taste, young and old. Consumers are becoming increasingly knowledgeable about content offerings and their data consumption needs. No doubt this industry is going through a transformation and a disruptive time and consumers are going to enjoy and are enjoying the ride. 80 we wanna make sure that this revolution and technologies and content continues to thrive and evolve to the benefit of all consumers, all over the country, including rural communities like mine in Iowa. More content choices and assess ability options, better quality and affordable prices make for a happy consumer. and Time Warner'say that this vertical merger witl, in their words, "Benefit consumers, strengthen competition and encourage innovation and investment," and of quote. They claim that by consolidating the assets of the two countries -- the two companies, it will be able to better compete nationwide and meet expectations of consumers. Now, however, critics of the merger say that this deal will have a negative impact on competition and innovations. There's concerns there that a combined Warner will block competitor access to popular Time Warner content. There's concern that a combined company will give preferential treatment, for example, favorable channel placement and zero rating pricing to Time Warner's premium entertainment programming, then, to the disadvantage of other content producers and particularly small, independent producers. There's also a concern about Warner's to leverage their assets to negotiate better licensing arrangements or raise the price of their content to the decrement of other distributors. There's concern about the merged company's ability to employ "bullying" tactics to dictate rates and terms to other networks. There's concern that this acquisition will concentrate too much power into one conglomerate, resutting in higher prices and fewer programming options for consumers. There's also concern about the merger's implication for a free and diverse media. This is something that I recently experienced because on weekends, when I'm at the farm, aiways watch channel 349 on DirecTV. I found out that it wasn't there anymore, I asked why, and found what is going on is an unfair contract negotiations. Now, these are all serious concerns which should be scrutinized carefully by the anti?trust regulators tasked with reviewing this transaction. 8 of71 7/7/201711:22 AM i CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition At the same time, some warn that we should be carefu! about how the Warner deal should be examined because of the dynamic nature of the industry, complexity of the marketplace, and fast paced innovation and changing consumer wants and demands. They question whether the current merger analysis methods are well suited to tackle this transaction and urge caution when determining the competitive effects of mergers between different complex, interconnected platforms. Secondly, they suggest that they may need to redefine market power and reassess how to analyze it in a fast shifting industry with multi-sided platforms. With tech giants like Google, Facebook, Amazon, Netflix and others changing the way consumers access content, it's legitimate to ask whether as one scholar recently said quote, "What looks straightfon/vardly anti-competitive in the old industrial- merger models, might not be so simple in the merger of modem media platforms," end of quote. Certainly, the Warner deal warrants close and careful scrutiny because it raises all these complex issues and concerns. We want to ensure that the proposed merger doesn?t allow an unfair advantage over competitors or facilitate anti?competitive practices with anti-competitive effects. Yet, we also need to be thoughtful, fonNard?looking analysis of the market that takes into account the complexities of modern interconnected media, content and telecom platforms and relationships. Ultimately, we want to ensure that competition thrives in this critical market and we don't stifle innovation. or deter emergence of cutting-edge technologies that consumers demand. Uttimately, we want to ensure that our policies don't lead to higher costs, fewer choices and worse service for consumers. i look fonNard to our discussion today. Thank you. LEE: Thank you. Senator Leahy? LEAHY: Thank you, Mr. Chairman. I am glad that Senator Lee and Senator Klobuchar are having this hearing. I I resist the temptation to go through the list of which shows I like the most and which -- and I use the most. I see too many peopie I know in the audience and l?rn afraid either make some happy or unhappy depending what I include or leave out. 90f71 7/7/2017 11:22 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition But I think it is an important hearing because the opposed, no matter what you supported or oppose it will be you have to agree the proposed 85 -- almost $85.5 billion merger can dramatically transform our nation's telecommunications and media landscape, it'll combine two titans of industry. And you have this kind of a massive consolidation, distribution in content. I mean it raises serious questions; what's it do for competition or consumer choice or privacy across the media. Our pay TV wireless, wireless and broadband, we have to look at that carefully, 130 million Americans depend upon for their wireless internet access. Last year, they acquired DirecTV's satellite television service. How is he gonna acquire Time Warner's content. These raise the questions, the obvious questions, about whether could begin to act as a biased gatekeeper for its own affiliated content and services. We know from the questions raised about the decision to not charge its wireless customers for data used to View DirecTV on their phones. Anti?competitive and anti-consumer actions by internet gatekeepers can be prevented under the FCC's 2015 Open internet rules, to establish clear and enforceable bright-?tine prohibitions on blocking or throttling and discriminating against lawful content on the internet. Meaningful net neutrality protections ensure the internet remains an open platform, one that fosters innovation and free speech. Strong net neutrality rules help mitigate concerns about a post-merger ability to harm competitors and consumers. But the very -- these net neutrality rules which I believe currently protect consUmers, appear to be under serious threat by the incoming administration. The president-elect has been openly opposed to net neutrality. He's formally named three staunch net neutrality opponents to oversee his FCC transition. And I think any weakness weakening of these rules are gonna cause serious harm to consumers and harm that would only be exacerbated by but we'll still be further mergers in the industry. That harm's not limited to this transaction, but impact all Americans who rely on the free exchange of ideas and information on the internet. As chairman, l'm going to submit questions for the record where have some due evolving appropriations at the moment. But l'm very concerned about this. I know you are. I know Senator Klobuchar is. LEAHY: Thank you. LEE: 10 of71 7/7/2017 11:22 AM CQ.com - Senate Judicialy Subcommittee on Antitrust, Competition Thank you, Senator Leahy. Your questions and those can be submitted by Chairman Grassley and anyone else wiil be admitted without objection. OK, we're now going to turn to our witnesses. I?m going to introduce them and we'll swear them in. Then we'll hear from each of the witnesses. We'll start from my left and move to my right. Randall Stephenson is the chairman and CEO of Mr. Stephenson was named to his current position in 2007. Since then, has invested to become a global leader and providing integrated communications services to businesses and consumers -- hang on, gotta make sure that I don't miss yours up mess yours up with someone else. Video entertainment, high~speed internet, and mobility to IP network services and the internet of things. Mr. Stephenson began his career with Southwestern Bell's Telephone Company in 1982 in Oklahoma. He served as the company's senior executive vice president and chief financial officer from 2001 to 2004, and from 2004 to 2007, he served as the company's chief operating officer. He was appointed to board of directors in 2005. He's a member of the board of directors of Emerson Electric and Boeing, a member of the PGA Tour policy board, and national president of Boy Scouts ofAmerica. Mr. Stephenson received his BS. in accounting from the University of Central Oklahoma and his Master of accountancy from the University of Oklahoma. Jeff Bewkes is chairman and CEO of Time Warner Inc. He was elected chairman of the board of directors in January 2009, having served on the board since January 2007. He was elected CEO of the company January 2008. Part of being named chairman and CEO, Mr. Bewkes served as Time Warner's president and COO from January 2006'to December 2007 and is chairman of the entertainment and networks group from July 2002 to December 2005. Before joining the corporate management of Time Warner, Mr. Bewkes served as chairman and CEO of HBO and as president and COO of HBO. Mr. Bewkes serves on the boards of Yale University and the partnership for New York City and serves on the advisory board for the Creative Coalition. He's also a member of the business council. Mr. Bewkes has a BA. from Yale and an MBA from Stanford. Mark Cuban is an entrepreneur and investor. He's the owner of the Dallas Mavericks, Landmark Theatres, and Magnolia Pictures and is the chairman of the HD TV cable network, AXS TV. He's also one of the main shark investors on the ABC reality television series ?Shark Tank." In 1995, Mr. Cuban and fellow Indiana University alum, Todd Wagner started AudioNet combining their mutuai interest in Indiana Hoosier college basketbali and webcasting. With a single server and line, AudioNet became Broadcastcom in 1998. By 1999, Broadcastcom had grown to 330 employees and $13.5 million in revenue for the second quarter. In 1999, Broadcastcom was acquired by Yahoo for $5.7 billion 0 in Yahoo stock. 110f71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 Gene Kimmelman is the president and CEO of Public Knowledge. Previously, Mr. Kimmelman served as director of the internet freedom and human rights project at the New America Foundation and as chief counsel for the US Department of Justice's anti-trust division. Prior to joining the Department of Justice, lVlr. Kimmelman served as vice president for federal and international affairs at Consumers Union. He's also served as chief counsel and staff director for the anti-trust subcommittee of the Senate judiciary committee and legislative director for the Consumer Federation of America. Mr. Kimmelman began his career as a consumer advocate and staff attorney for Public Citizen's Congress Watch. lVlr. Kimmelman is a graduate of Brown University and holds a JD. from the University of Virginia where he received the Fordsman (ph) Fellowship. He was also a Fulbright Fellow. He presently serves as senior fellow at the Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado and is senior associate with Global Partners Digital. Daphne Ziman is a filmmaker, founder of a music label philanthropist and author living in Beverly Hills, California. She's the president and chief creative officer of Cinemoi, a television network focusing on film, fashion, and international style, founder ofa music label, Unicorn SSD Records, a writer, director, an award- winning author, and a philanthropist. lVls. Ziman works as a writer, producer, and director. Her latest fiim, "Footsteps," debuted on Showtime. lVls. Ziman also serves on the advisory board of the philanthropic arm of the State Department, IREX as well as the board of trustees of Children's Institute International, is a chairperson Love, Adoption Brings Children Love. Before we begin, I'd like to swear in the witnesses and ?so if you'd all stand and raise your right hands. Do you swear that the testimony that you're about to provide to the subcommittee will be the truth, the whole truth, and nothing but the truth? Thank you. Mr. Stephenson, you'll be up first and you mayrbegin. STEPHENSON: (OFF-MIKE) LEE: . Ifyou could push the button until it turns red, we can hear you better. STEPHENSON: And the rest of the members of the committee, i appreciate the opportunity to talk 12 01?71 CQ.com Senate Judiciary Subcommittee on Antitrust, Competition about the benefits of combining distribution with the worid class content of Warner Bros, HBO, and Turner. And for your constituents, we believe the benefits are straightforward and they're substantial. They will get more choices and lower? priced options and that means more nationwide competition against the cable companies in each of your respective states. What this merger is not about, is consolidation either in media or in telecom. is a communications company. We distribute content. Time Warner is a media and entertainment company. They create content. And this is a classic vertical merger and it eliminates no competitor from any market. In fact, it increases competition, particularly against the cable companies. And our intent is to disrupt the existing pay TV model. We want to get the most content to the most people at the lowest prices and we want consumers to pay for their content once and then watch it anywhere at any time. Every episode, every season, on whatever device they choose. But disrupting entrenched business models is hard and it generally takes bold steps and combining scaled distribution with scaled content creation is such a step. it's going to allow us to accelerate innovation and without exception, when one company accelerates innovation in a market, everyone accelerates innovation. And faster innovation and content delivery will naturally accelerate deployment of SG mobile networks with greater than one gig speeds. And we've seen this happen before. it's important to recall that we launched the world's first iPhone at on a 26 network. And as demand for the iPhone and more bandwidth exploded, the US. mobile industry accelerated deployment of 3G and then 46 mobiie networks. And this drove, two, multibillion dollar network upgrades in the course of five years. And we're about to experience this again. DirecTV Now and other planned innovations with Time Warner are 56 services that are effectively going to be launched on 4G networks. And just as we witnessed with the iPhone, we expect 56 deployments to accelerate. And notjust for We think it will accelerate across the industry creating even more competitors for cable. And this is exactly what we believe consumers want. New, lower-priced options and the power to decide themselves. And a good example as has been referenced in the earlier comments is our new DirecTV New product that we launched last week. This is 100 channels starting at $35 streamed to any device. The customer has no contract requirements, no credit check, no installation, no set-top box, and the price includes the data charges for mobility customers. And during our first week in the market, the uptake of this new service has exceeded all expectations. And as predicted, the industry has already begun responding. in fact, just last week, shortly after we announced this product, CBS added the NFL to its alluaccess streaming service at no additional cost. Innovation by one invariably begets innovation by ali. I've talked a lot about what will change because of this merger 13 of7l 7/7/201711:22 AM i CQ.com Senate Judicialy Subcommittee on Antitrust, Competition and I want to really quickly talk about what will not change. will continue to be a leading investor in America. We've invested more in the United States than any other company, each of the past five years. You should expect that to continue. We will continue to do our part in keeping America the global leader in two specific areas. Innovation and deployment of advanced communication networks and creating content peopie want to watch. And we will encourage and support independent journalism. STEPHENSON: And we will not withhold content to disadvantage somebody else. Time Warner was built on a platform of broad distribution of its content into every home and it would be illogical for us to change that. I And, finally you should expect to continue doing what we've always done, that's distributing a wide array of diverse high quality content across all of our platforms. So, in conclusion, this merger is going to drive investment, it?s going to drive innovation in an industry that we believe is begging for both of those. So, Mr. Chairman, thank you for the opportunity and look forward to your questions. LEE: Thank you Mr. Stephenson. Bewkes? BEWKES: Chairman thank you, Chairman Lee, Ranking Member Klobuchar and members of the subcommittee. Thank you for inviting me; I'm Jeff Bewkes, Chairman and CEO of Time Inc. -- Time Warner Inc. I appreciate the opportunity to talk to you this morning about why a combination with not oniy makes sense for Time Warner, but also is good for consumers. In short, combing Time Warner?s video content with distribution will accelerate the development and delivery of the next generation of video services, providing consumers with greater choice, convenience, value, and importantly, better affordability. Before I talk more about that, let me briefly tell you about Time Warner. Since 2009, we've been focused on producing and distributing video content, film, television and video games at the wholesale level across a wide range of outlets. We do this 14 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition through three divisions, Warner Brothers, on Box Office and Turner Broadcasting. We do not own any cable, satellite, telephone, broadband, or wireless distribution business. And, as a video content company, our success depends on achieving the broadest distribution of our content, and on embracing innovative ways for consumers to enjoy what we have to offer. Warner Brothers is a great example of this. it's the leading television studio in Hollywood, because the most talented producers, directors and writers come to us to make their shows. The reason they do that is they know that Warner's will find the best home for their shows on any network or overtop services. Warner supplies shows to every broadcast network. While also producing for basic cable networks, premium cable services, including both HBO, it's competitor show time and services like Netflix and Hulu. Warner has also been a feeder in innovation, including making it possible for viewers to watch the full season of its shows on demand on broadcast networks. Those principles of broad distribution and innovation hold true at HBO, whose success depends on reaching and passionately engaging viewers, whether they subscribe to a paid TV service or only have broadband. That's why we launched HBO Now, which offers HBO's programming without the need for a paid TV subscription. The same is true at Turner. Turner must distribute its networks which depend on subscription and advertising revenue, broadly across all platforms and devices. That's why Turner is licensed it's networks to new broadband delivered bundles offered by Dish, Sony, Direct TV, and Hulu. We're proud of what Time Warner's accomplished, but today we're competing for consumer's attention, not just with other TV networks, but with everyone from and Amazon to YouTube and Facebook. Great content is not enough, you need to deliver great consumer experiences and that's whatjoining with will allow us to do. We'll continue to work with all distributors, both but combining with will make it easier and faster for us to innovate for consumers. Including offering more Choice in network bundles with great interfaces, great on demand content and interactive features, more over the top services like HBO Now and More short form content, particularly on broadband and mobile. Currently, when we try to introduce innovations for consumers, we often need to roll them out distributor by distributor as part of a affiliated agreement negotiations, that take place only every few years. TV Everywhere is a pretty good example of this. We introduced TV Everywhere in June of 2009. it was based on the simple idea that, if you subscribed to paid TV service, you ought to be able to watch your favorite programs, notjust on TV and 15 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 on the TV set, but on any connected device of your choice, at no extra charge. It's now seven years later, and TV Everywhere still isn?t fuliy embraced by all of the cable distributors. BEWKES: By combining with we can accelerate the process of introducing innovations on a nationwide basis and we can have more flexibility to adjust to changing consumer expectations. Providing consumers with more choices and better experiences, at more attractive prices, while spurring industry-wide competition and innovation. That's why we believe that this transaction is right for our company and good for consumers. Thank you. I'll be happy to answer the questions on any of these points. LEE: That you Mr. Bewkes. Mr. Cuban? CUBAN: Thank you for inviting me to give my testimony and speak before you today. My name is Mark Cuban and I've been an active entrepreneur in many fields throughout a career spanning over three decades, having started started or invested in more than 200 companies, creating thousands ofjobs. I?m also proud of the fact that a TV show I'm part of, Shark Tank helps inspire millions of potential entrepreneurs every week. The media world has changed. Back in 1995, a partner and I started a company called AudioNet and built ourselves as the broadcast network on the internet. We were one of, if not the very first streaming content aggregator and distributor on the net. Back then, the biggest competitors to our online streaming and consumption of our content were radio and TV. The world has changed quite a bit since then, but maybe not in ways that are obviously. Historically, TV had been the median. We had we all used to wonder why we spent so much time watching TV. When asked why TV, my answer was always the same. TV is the best alternative to boredom. It's the closest that we can come to doing nothing while thinking we are doing something. It was always our go to way to kitl time. Those days are gone. In the past we went to our media. We came home, turned on the TV, plopped down on our favorite or couch and vegged out, pulled out a cold beverage. Today, our media comes to us. How content comes to us is changing almost daily, 16 of71 CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition and has become an important subject in a world of anti?trust in media and distribution. Today our best alternative to boredom comes from an app. Firing up an app on whatever device you happen to have in your hand, no matter where in the world you are, is how we kill time. The idea that TV is the dominant content delivery mechanism no longer is valid. Instead, we fiil our time by consuming content for Facebook, lnstagram, Snapchat, Messenger, Whatsapp and slowly, from virtual reality companies like Oculus Rift. Combined, these apps reach more than 1.5 billion users a month. They can deliver any kind of content in any manner the consumer would like to receive, be it message, video, VR, post, ad, you name it to populations around the worid in a I manner that dwarfs television. Facebook is without question in a dominant position, if not the dominant position for content delivery. Imagine what Facebook and theirrespective competitive landscape would look like if they had not acquired lnstagram, Oculus Rift or Whatsapp. if those were separate companies competing in the marketplace, the content world would look much different and be far more competitive. Facebook maybe the biggest player now, but they are not the only major content provider. Snapchat is taking over miilennials as the best alternative for boredom. We all have seen the never-ending stream of selfies, videos and more take over some of our kid's lives. For those younger than the Snapchat generation and yes, they do exist -- there is Musical.ly and Live.ty with tens of miilions of users and growing. Or Microsoft's Minecraft, inquired property, with over 100 million users. I can tell you from personal experience, punishment for my 7 year old is taking away his Minecraft videos. He could care less if he loses TV privileges. TV is experiencing a declining share of content consumption. It is losing viewer to the other dominant content players in Netflix, Amazon with Prime, and Twitch, an acquired property. Apple with music, Beats as an acquired property, and finally Google with YouTube, also an acquired property. And Google has the ultimate programming guide, their Search. Given the time constraints, 1 will pick another time to discuss the impacts of having only two companies, Google and Apple that act as the sole gatekeepers to the app ecosystem. But you may notice that have not mentioned or Time Warner yet, because neither is in a dominant position. By themselves, and Time Warner will have a very difficult time controlling their own destinies, let alone trying to insert influence on a market. This merger is not one of survival and opportunity, but one that's needed by consumers. We need more companies with the ability to compete with Appie, Google, Microsoft, Amazon and Facebook. Deiivering content to consumers in this app-driven world is not easy. It is very expensive and difficult. Apple, Googie, Amazon, Microsoft and Facebook are five of the seven most 17 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition valuable companies by market cap in the world, and all have established dominant positions. That is exactly what the Time Warner acquisition -- why the Time Warner acquisition for is an important strategic content acquisition. Alone it will be very difficult, if not impossible, for either to compete with either of the companies I mentioned. Together it will still be difficult, but they wiEI have a chance to battle the dominant players, and increase consumer choice in competition for consumer attentions. I've run out of time, but l'd like to also say that each of the largest content companies We mentioned so far, Facebook, Google, Amazon, Microsoft and Apple, present much, if not all of their content algorithmically. At least with good old?fashioned TV, we get to pick the channels we want, rather than have our feed tell us what we want. Thank you and I'll look forward to answering your questions. LEE: Thank you, sir. Mr. Kimmelman? KIMMELMAN: Thank you, Mr. Chairman, Senator Klobuchar and members of the subcommittee, on behalf of public knowledge and today I'm joined by Consumer Federation of America and our statement. I appreciate the opportunity to testify. Mr. Chairman, l'd like to ask that the report we released this morning that Senator Klobuchar referred to with, could be see if they?d be put in the record. I know it looks like great bedtime reading to you by its size. LEE: Without objection. KIMMELMAN: But I start here, because this is about a description of the last 20 years of activity in this industry, which I think is relevant to look at this morning, as you consider the impacts of this merger. All the leadership of the committee pointed out all the potential pros and significant cons of this. raise this because what it shows is that that $2,700 that consumers are paying per month, there are a lot of issues as to why that number is so big. During that 20 years, there were times when lax anti-trust oversight allowed substantial mergers of cable and telephone companies and content companies, there were times where there was limited regulation. And what we conclude is, 18 01?71 7/7/2017 11:22 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition looking comparing the prices consumers are paying with the actual competitive costs; we're probably being overcharged by at feast about $45 per month. Your constituents, for those services, because there are too few players already in these markets. They're massively concentrated. So, in that context, adding firms that have more than 130 wireless subscribers nationwide, 25 plus percent of all TV viewers through satellite and wire, bundled services with market power, and the wonderful content that Mr. Bewkes described with Time Warner raises very significant questions for consumers. Now they've talked about all the wonderful things they can do. I want to highlight they are excellent companies that have begun to compete more aggressively in the over?the?top market. They're doing really good things for consumers. That's wonderful, as separate companies, contracting with each other and others in the marketplace. The question for anti?trust review and regulatory authorities is, will that continue? They've described what they have done very well, and we applaud it as benefits to consumers in many instances, but will that really continue? With these enormous assets coming together and in a market where there are very few players just ask your constituents, how many broadband providers do they have, how many cable or other comparable TV providers that can give them the full panoply of services, how many are there? And I appreciate Mr. Cuban's points, but the fast time I looked Google and Facebook weren't charging me more than $200 a month to get those apps, to get their content, and the last time I looked, you all may remember this, too, do you remember when you as teenagers or your kids spent more than like an hour on the phone? Talking to friends? Do they do that anymore? No, Snapchat, apps. its voice service that has gone here, but that is not the same as professional quality video that Mr. Bewkes' company produces. That's something different. And every one of those companies Mr. Cuban referred to, relies on the fundamental infrastructure, the plumbing of the internet and telecommunications system that is controlled by very few companies, two dominant cable, two dominant phone, including KIMMELMAN: It is that market power that concerns us, and is this just a hypothetical or possible? Well, the Department of Justice and FCC have already found that incomparable transactions including Comcast, NBCU, when you combine this kind of quality content with market power, there are enormous incentives to favor yourself and harm competitors, block competitors, raise prices to rivals. And this deal is even bigger. That was a regional cable monopoly. This is 19 of71 7/7/2017 11:22 AM CQ.com - Senate Judicialy Subcommittee on Antitrust, Competition nationwide, satellite TV distribution, nationwide wireless. The incentives will be even greater. In that environment, the bottom line is, we urge law enforcers to reject this merger unless they can absolutely show that these competitive harms will not arise, that there are actual paths to increase. benefits to consumers and absolutely show that they truly have the regulatory tools in an environment, where it appears regulations will be withdrawn and oversight will be limited. This is notjust about money, Mr. Chairman, members of the subcommittee. it is the diversity of programming owned by different people over different platforms that fuels our democracy. No one has said it better than the president-elect. it is in that environment we urge to you look at this carefully and enforcers not to take risk with the transaction that could be harmful to that democratic process and consumers' pocketbooks. Thank you. LEE: Thank you. Me. Ziman? ZIMAN: Chairman Lee, Rankingi'Member Klobuchar and members of the subcommittee, I want to thank you for inviting me to testify today about the impact of the proposed AT&T?TimeWarner merger on minority channels, cultural diversity, gender diversity and independent programmers. My name is Daphna Edwards (ph) Ziman. And, as many of you know, I've spent the last 20 years of myulife coming here to advocate on behalf of women and children. l'm here today as the founder, president and chief creative officer of Cinemoi, a women?owned 24whour award~winning network dedicated to curated films, high fashion, internationat lifestyle and environmentally profound programming. Cinemoi is an independent network that is trying to make a difference in the media industry. It's designed to lift the image of women. Cinemoi is defined by high quality content. Originally we launched en DirecTV on September 17th, 2012. Cinemoi is available on Verizon 5 for a tier (ph) and via (ph) the internet and reaches millions of subscribers. Cinemoi is a true independent. We chose not to be a part of a bundle because doing so would undermine what Cinemoi is and woutd stifle our creativity. Cinemoi is also a minority owned channel, as it is one of the only two networks majority owned by a woman; the other one is Oprah Winfrey and she?s distributed 20 0f71 7/7/201711222 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition by Discovery. Independent programmers are the risk?takers that provide innovative content. Today, 90 percent of the content on TV is controlled by six conglomerates. The industry is currently structured to shut out new entrants, which are mostly independent programmers, and keep channels like Cinemoi from making it and providing competition to incumbents in the industry. independent programmers understand very well the pressures that (ph) face from giant content providers. But more consolidation is not the answer. In the current state of the media industry, the survival of independents is at a significant risk. Further consolidation would be catastrophic to diversity, additionally silencing minority and women-owned voices. claims that vertical integration is not harmful. The fact is that vertical consolidation gives both the means and the incentive to discriminate against independents. For example, Cinemoi competes with many cable networks, Turner Classic Movies being one of them, which is owned by TimeWarner. DirecTV's own tent of (ph) research showed that two-thirds of viewers aiso watched Cinemoi. In a non-vertically integrated market, competition between Cinemoi and TCM is in the best interest of the public. But when owns TimeWarner, shutting out competitive channels like Cinemoi is not only easier but cheaper. Such loss falls upon the American people. argues that OTT distribution offers sufficient opportunities for independents but relying on OTT is the one-way ticket to bankruptcy. Like other independent networks, Cinemoi is negotiating deals on these new platforms. However, linear distribution, because of its broad reach, remains the most effective way to develop awareness, brand recognition and consumer demands. The OTT market is a maze of confusion and lots of content that's not organized. Approximately 20 percent of television households are cold cutters, not because of preference but because of the intolerance to the lack of curation bundles of repetitive the repetitive and copycat programming. The remaining 80 percent should be -- should not be denied programming'that meets their needs and interests. OTT revenue alones (sic) will never allow independent networks to compete with incumbent channels that enjoy multiple revenue streams. 21 03371 7/7/201711222 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 Moreover, controls the distribution to more than 172 million cable, Internet and mobile subscribers and can utilize a variety of techniques to favor its own content and disadvantage independent networks like Cinemoi. These concerns are real. DirecTV and is currently under investigation by the Justice Department for unfair tactics against programmers. in fact, independent programmers are only offered channel on if they sign a pay-for-play deal with DirecTV, That's precisely what happened to Cinemoi. Look at the panel testifying today. It is supposed to represent a broad cross-section of the industry, yet it is dominated by white men. The idea the -- that opportunity is lacking for women and minorities in media isn't hypothetical. It is clearly symbolized by this dais. Women are the majority of the population, controlling 14 trillion in wealth, two?thirds of the country's wealth and 70 percent to 80 percent of all household spending. Yet only two networks are owned and controlled by a woman. Women deserve presence in the media. The airwaves utilizes belongs to the American people, bestowed upon the by the people, for the people. And has a fiduciary responsibility to utilize this resource in the best public interest. That obligation includes creating opportunities for cultural diversity and democracy of voices. Sadly, is doing everything in its power to avoid a review by the FCC, the one agency that could review this merger through public interest lens. 80 the question for policymakers is this: does a company that will go to any to avoid public interest scrutiny really care about democracy and cultural diversity, the survival of independents, risk?takers or innovation? The American consumer is ultimately the one that will be the worse off from further consolidation in this industry. If we learned anything from this last election, it is that the American people are angry about the growing divide between the haves and the have-nots. Independent programmers are the have-nots in the media landscape. Diversity of content is in the public's best interest. OK, I have things to say, if you'd like to ask questions. Thank you. Sorry. LEE: Thank you, Ms. Ziman. OK. I will now kick off the questioning. lVlr. Stephenson, I'd like to start with you. I'm going to ask you a very simple question. 22 01?71 I 7/7/2017 11:22 AM . CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition Will this merger, assuming it's carried out to completion, will it result in lower prices for consumers? And if so, how and why? STEPHENSON: was asked that exact same question in front of this committee a couple of years ago when we were working on the DirecTV transaction and 1 represented that, yes, it would; by virtue of the innovation, we'd be able to bring lower price capabilities to the consumer. I And literally within a (CROSSTALK) LEE: Which wasn't the exact same question because it was a different context and STEPHENSON: But it was a very -- it was a very similar transaction in that the lower prices would be a result of the innovation that would follow. And within a year, year and a half of that transaction closing, the innovation has followed. And, in fact, there have been two significant innovations. If you're a DirecTV customer, you can stream all of that content to your mobile device -- no charge. And then we launched, as I said, last week, DirecTV now. This is a little over a year since we closed the transaction, 100 channels at $35. And I think that is significant innovation that did result in lower prices to the consumer. And in $35 includes the mobile streaming. So as you put two companies together under one umbrella, this is why it's so important, Senator, if you'll bear with me a moment, you can speed innovation like you can never do in OrangeLink's (ph) relationships and transactions. DirecTV is a is a classic example of how that happens. What we are talking about doing, by combining TimeWarner and is taking the innovation in DirecTV now to a whole different place and a whole different level, because our ambition is to ensure that the customer pays for their content only one time, because, today, a customer pays for their content. If they want to watch it on a mobiEe device, they probably have to pay for it again via an app. If they forget to watch a show and they want to go look at it on over?the?top means, they'll have to pay for it again. Our objective is to take that out of play, pay for it one 23 of71 7/7/201711:22 AM - CQ.com - Senate Judicialy Subcommittee on Antitrust, Competition time, give the consumer the ability to watch it anytime, anywhere, on any device they want. We think that will result in lower prices and lower cost to the consumer. LEE: Mr. Kimmelman, what is your response to that? Mr. Stephenson tells us it will result in lower prices. What do you say? KIMMELMAN: Hard for me to see it for sure, Mr. Chairman, because, in the DirecTV deal, which we had concerns with, which were addressed by regulators and the anti-trust officials, there were 'clear efficiencies of putting together a bundle that a satellite company could not do on its own for transmission. It couldn't really offer both video and broadband. 80 I am extremely pleased to see Mr. Stephenson's companies responding to that and taking advantage of those efficiencies to lower prices. I I don't see those here in this transaction. They could contract to do the same things that he's talking about as wonderful innovations without the risks of the merger. LEE: Mr. Cuban? What's your reaction to the answers given by Mr. Kimmelman and CUBAN: Yes, I'm just not realty my wheelhouse. I don't have a comment on it. LEE: Got it, got it. CU BAN: (CROSSTALK) LEE: IVlr. Bewkes, I'd like to turn different question7/7/2017 11:22 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition back to that if you?d like. But I first want to ask you so I'm encouraged to hear that TimeWarner's business model is based on broad distribution for content. Other companies obviously have taken a different approach. Netflix, for example, has been a successful company. It's got a market cap at $52.9 billion and so that's a viable option to take a different approach different approach. Can you tell me how TimeWarner weighs broad distribution versus exctusive contentyou balance BEWKES: Sure. LEE: relative attractiveness? BEWKES: We're been able to build our networks -- CNN, HBO, TNT, Cartoon Network ?4 only because we have broad distribution. And if we were to and we've never done this -- if we were to not offer our networks over any of the cable satellite, telco or over?the-top platforms that are now the place where increasing numbers of Americans are choosing which one to get their TV service through, we would be cutting off meaningful revenue for our company. There's no incentive for us to do that. That's first. Secondly, we invest a lot of money in making these brands relevant CNN, HBO, if you all think about them and we'd be doing that in a manner where we'd be hurting the very investment we're making in having these brands mean something. Third, there's a considerable amount of advertising support behind the Turner networks, including CNN. And if we didn't have full coverage, we can't sell advertising effectively to advertisers. Fourth, it's very important and it's essentially the life blood of our company to be able to attract the best talent, the best directors, the newest movie idea. These 1 come from independent producers. They come to us because we have the resources and the distribution reach to put their product in every home. lfwe didn't have that, we wouldn't be able to get the next hit show, the next hit movie. 80 those are essentially the reasons why we would never even think of doing this. And then a final point, which, Gene, you might want to comment on, we owned 25 of71 7/7/201711:22 AM CQ.com Senate Judiciary Subcommittee on Antitrust, Competition TimeWarner Cable for 20 someuodd years; either a big piece or a minority piece and we managed it. It never occurred to us to do anything either restrictive or different in terms of price position, packaging, access to networks for that company when we owned it versus what we then did after. BEWKES: So there's just simply no incentive for us to do it and, in fact, there?s really no ability for us to do it. It would hurt our business. LEE: There's no incentive; could those incentives change over time? Couldn't those incentives result down the road in you taking a different path? BEWKES: No, Senator, I can't see a case. And I'd invite anybody here to try to propose one where that would make any sense at all. (CROSSTALK) LEE: lVlr. Kimmelrnan is shaking his head. Do you want to add something to that, sir? KEMMELMAN: I totally understaner. Bewkes' point and his description of his business and it's exactly what NBC said when they came before you and they were being combined with Comcast. 7 In a careful analysis, the anti?trust division did not find, when the companies merged, that those incentives were the same and that there were opportunities. And while TimeWarner Cable was, what, 15 million subscribers and certainly it made no sense to limit TimeWarner content to just 15 million, here you have 25 million-plus from satellite and video. And you?ve got more than 130 million now wireless. With that customer base, you have to look at the real combined incentives. This isn't TimeWarner entertainment, TimeWarner's incentives as a content company. This is the merged with content. And I just think the anti-trust officials are going to need to look carefully at those. 26 of 71 7/7/201711122 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition LEE: OK, I see my time's expired. And we want to stay on the clock here. We're going to go next to Senator Klobuchar. KLOBUCHAR: Thank you very much Mr. Chairman. I want to start with Mr. Stephenson. With your initial question about the prices for consumers -- and i know you've focused on the last deal with DirecTV and what had come out of that. Just to be clear on this acquisition, do you believe that it's going to lower prices for customers for DirecTV broadband services and mobile services? When you want to take each one. STEPHENSON: I can and intend to represent to you that, by virtue of innovation with TimeWarner and going head-to-head against the cable providers with new products and new capabilities, that we will bring the consumer better priced options than what they have today. To take each one of those apart I find difficult because the consumer has gotten to a place where they're not procuring each one of those independently. That's the reason for the way we're pricing DirecTV now. We're -- think about what we're trying to do. We're going against a cable provider to compete. You buy TV service from a cable provider today, you spend $50 to $100 per month. Regardless of how much you watch, it does not change what you pay. If you sleep with the TV on all night long, it doesn't change what you pay. To compete against a cable provider, we have to bring a mobile service. And We're competing with a mobile service that has the same characteristic. Can you make it where the consumer does not think about how much they're leaving the content on? As we work with TimeWarner and begin to think about new forms of content, cloud-based DVRs, getting the rights and putting those kind of capabilities into our product offering, bringing more value to the consumer, giving them the ability to use video over their mobile device just like they do when they're watching cable TV we think that's a huge value to the consumer. KLOBUCHAR: OK. 27 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition Mr. Kimmelman, because, you know, you have your new report coming out today, what, 46 a month, you say, that cable subscribers are paying that they shouldn't pay. 80 how did that fit into what Mr. Stephenson was saying when he's arguing, well, this is a new kind of offering that could help bring those prices down? KIMMELMAN: It is a new kind of offering, it is extremely welcome in the marketplace to see the DirecTV now offering and challenging cable, which no one traditionally has gone out of their historical telephone region or cable region to challenge each other all good. That's all premerger. I applaud that. The question is what happens when you combine all of these assets. And that's the fear. And, again, it may be a wonderful product. Mr. Stephenson says pay once, sounds great to the consumer But if it's what happens to others who want to get on that service? if it's zero rated, are they all going to get on? What happens to others who want to offer a different product? Are they all going to be able to get TimeWarner content under the same terms and conditions or (CROSSTALK) KLOBUCHAR: Right. I mean, so there are a variety of competitive harms that have to be looked at in comparison to what they want to offer. KLOBUCHAR: And I want to end with that. But before I get there, i just want to talk about this issue that Mr. Cuban raised, you know, it's the competition, with potentially the new environment with Facebook and Google. And I'm hoping we're going to have a hearing on some of these broader communications issues, next year. That was my OK. So but, on this generally, how do you see this one? Mr. Cuban says, well, no, they need this to be able to compete in this new world. 28 of 71 I 7/7/201711:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 But you point out that they're not paying money for Google or Facebook apps, right? KIMMELMAN: Senator Klobuchar, I would urge the committee to look at every place there is market power in the sector. There could easily be that in the online distribution on the platform, among the platform companies. When I was at the Department of Justice, we looked at transaction involving Google and a company cailed and we were prepared to challenge it; it was airline services online software that we thought would foreclose competition in that market. Their -- and a consent decree was worked out. But there could be legitimate issues in many places. But the fact those companies are prosperous and may be doing things that are harmful does not take away from the fact that here we have very few ways for the consumer to get to their apps, their other services. And is one of the dominant gatekeepers to get there. KLOBUCHAR: OK. Mr. Cuban? CUBAN: Yes, I would disagree with that; just on its surface, the DirecTV now is an example. If Apple decided they didn't want to distribute it, they have nothing. If Google decided they didn't want to distribute it or either decided to give it such placement that people would have a hard time finding it, they have no business there. And so they really can't even control their own destiny. And I think it's an issue that's out of their hands, despite what Mr. Kimmelman is saying. KLOBUCHAR: OK. i want to just end here on the content side here with you, Me. Ziman. You described this practice you referred to as pay-to-play and talked about how it harms independent programmers. Could you explain that more? And do larger networks have to pay to play? ZIMAN: 29 of71 . 7/7/2017 11:22 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition 0003 Yes. Independents now barely can get on at all. If they do get proposals, it's usually free for a period of time or otherwise pay?for?play, which means they have to pay to access the subscribers, which means that they cannot (CROSSTALK) KLOBUCHAR: Because they're not going to be part of the bundled package? They're not -- but not just that, because they're not given the bandwidth to be able to access. And if they are, they're sent to Siberia. So -- and the reality is that the are concerned that any of those independents may become must?have content because then they'll have negotiating power. My friend, Mr. Cuban, has negotiating power because he owns a sports team. The reality is that one of the highest executive at DirecTV said to me point-blank, we're in the male sports business. So you are dealing with independents that have so much other content that the public wants and is interested in and they're not getting access to the pubtic. And that's wrong. It's wrong for democracy. KLOBUCHAR: All right. Speaking of sports, iVlr. Stephenson, in your testimony you say that programming is more valuable when distributed to as many eyes as possible. However, NFL's Sunday ticket is available only through DirecTV. And during the Comcast?NBC Universal (ph) merger, the parties made similar arguments yet the FCC decided that the merged company would have incentive to limit the distribution of its content and discriminate against independent content providers. I want to make sure I understand your position. Are you saying mergers, where a content distributor acquires a content producer, can never raise antiwtrust concerns? Or that, in this particular situation, there?s not an issue? And how do you answer this fact that there's a lot of concern here about -- with owning content at the same time as distribution, that there would be discrimination? 3O 0f71 7/7/201711222 AM CQ.com - Senate Judiciazy Subcommittee on Antitrust, Competition STEPHENSON: I'li try to take the question apart and make sure I answer it fuliy. The NFL is probably a classic example of a content owner, who pretty much determines and dictates how content is distributed and they're very strong. They have a great product and they parse the content up significantly. And we pay them for whatever rights we can get from them. So they kind of -- not kind of; they determine how the content is distributed. We don't. We distribute it to our customers for what we pay. It's not something that we just exclusionarily put it out there. It's what the NFL has contracted with us to do. In terms of I want to make sure I understood the second part of your question as to a vertical merger. (CROSSTALK) KLOBUCHAR: Right. STEPHENSON: do I think that's just a cookie KLOBUCHAR: Right. STEPHENSON: No, no, i don't think there's such a thing, particularly in the world of anti~trust. I believe this particular merger, when you put it together, you see that, before the merger and after the merger, the competitive market looks identical. The distribution market looks identical. The content creation market looks identical. There are no overlaps. And so it is a classic vertical merger. But the Department of Justice will look at this. And to the extent there are concerns, we do believe they could be remedied with conditions. STEPHENSON: As it reiates to the comment about independent programmers, though, I'd like to just quickly respond. 31 of7i 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition If there is concern about access of independent programmers to the consumer, the one model that does not work -- and we're demonstrating that is the present model. The present model needs disruption. it needs a different model. That's what we?re trying to do with both this transaction and the prior transaction we did. But the reality is, when we acquire content from content owners, there is a medium by which we ifwe want the top content they own, they say take that plus the other five or six channels that you possess. That is what's filling up this program guide. It?s not anybody trying to be exclusionary. it is filling up the program guide with peripheral stuff that you have to take if you want to get the primary content that a content owner wants. DirecTV Now is step one; acquiring TimeWarner is step two. But DirecTV Now is how we're skinnying down a lot of that peripherai stuff, getting a smaller bundle that the consumer wants. That's how you get to a $35 price point rather than $80 price point. That's where we think we have an opportunity to keep doing more and more of this in the future. KLOBUCHAR: And just last, I know we response from Ms. Ziman very, very quickly, but could you foresee that there would be a some of these bundles that wouldn't involve sports? STEPHENSON: Oh, of course. In fact, there is a huge segment of our market that wants a bundle that does not include sports. Sports is probably the biggest driver of the content cost in the bundle today. And to the extent we want to meet a certain price point for the certain segment of our customers, getting sports out is the way you drop the content cost and get a lower price point in the market. It's really important. KLOBUCHAR: Except for the NBA Dallas games. All right, OK, thank you. LEE: Senator Hatch? 32 0f71 7/7/2017 11:22 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition HATCH: (inaudible) is here today and l'm helping to host them. So I'm thanking you very much for atlowing me to go ahead here. And my colleagues as well. This is an important hearing and an important subject we're considering today. l'd like to begin by quoting briefiy from an op-ed published yesterday in ?Forbes," that I believe frames how we should -- how we should approach the subject of today?s heanng. The central question in any merger review is how the transaction will impact censumer welfare. Because and TimeWarner are not competitors, concerns about increased market power or a loss of competition, the sort of sorts of concerns we often see in large mergers, apparently do not apply. Rather the pertinent inquiry is whether ownership of TimeWarner content will lead to exclusive dealing, improper favoritism or other acts that narrow consumer choice and reduce service quality. At the same time, we should carefully evaluate the party's claims that the merger wili benefit subscribers by, for example, expanding the amount of available content that doesn't count against data caps, unquote. Now I hope these principles can guide our discussion today and ask unanimous consent of the copy of the op-ed that I wrote be entered into the record. LEE: Without objection. HATCH: Mr. Stephenson, you've pushed back pretty strongly on claims that will have an incentive to favor TimeWarner content over non?affiliated content excuse me or to withhold or threaten to withhotd TimeWarner content from competing broadband providers. Now I?d like you to spell out your argument for me. Why wouldn't it make economic sense for to use its ownership of TimeWarner content to raise prices or attempt to freeze out competitors? And why wouldn?t it make economic sense for to degrade service speeds for non?affiliated content? STEPHENSON: I'll start with why we would have no incentive to preference. 33 of71 7/7/2017 11:22 AM CQ.com - Senate Judicialy Subcommittee on Antitrust, Competition could paraphrase your question, I think I understood it correctly, TimeWarner content over others and I think it's important to understand and I've thought a lot about this -- we're paying, including the debt, over $100 billion for TimeWarner, investing a lot of our shareholder money to acquire this content. It's very, very unique content. And you heard Mr. Bewkes earlier explain the business model and how he built a business that is worth $100 billion, which is quite a feat in and of itself. The business model's fundamental premise for attracting talent, for attracting investors into content, the fundamental premise of that is wide and broad distribution of their content into every home, particularly in the United States of America. While one could argue and I'm sure the Justice Department will took at this closely while one could argue that it might advantage our distribution business to somehow give proprietary access to TimeWarner, it would make no sense to $100 billion business we're acquiring to do that. It would impair the value of that business dramatically. And I've received a big education from Jeff on this. The Clint Eastwoods, the Steven Spielbergs will not bring their talent and their capabilities to a company like this that is that is limiting the distribution of that content. It is a fundamental basis of the value of the company. So Ijust .. I don't see, first of all, the economic rationale and nor do see, from our standpoint, the customer rationale, because, at if you go back to the distribution side, we have built ourfranchise on a very open model. lfthere is content that the consumers demand and want, we want it out there. We have littie value ifwe start limiting access to content. we are what we call an open source company. We're not smart enough to know everything the consumer wants, whether it be an app, whether it be a smartphone device, whether it be content. So we try to open our network up to all and accommodate all that want to come in and iet the customer choose what they want. So limiting the content that our customers can get in this day and age of the Internet is, candidly, for a distribution company, not a smart business move. HATCH: Thank you. Let me just ask this question to Messrs. Stephenson and Bewkes. l'd like to zero on -- in on the benefits to consumers. Now how specifically will this merger benefit consumers? And l'd like to you share specifics, not generalities. 34 of 71 7/7/201711:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition And to give an example, Mr. Stephenson, in your testimony, you talk about DirecTV Now. How will this merger help you deploy DirecTV Now? And how will that service benefit consumers? STEPHENSON: Thank you. DirecTV Now, it took the DirecTV acquisition to make that a reality, to get a relationship with content players and the to gain the rights, the content rights, to distribute their content to mobile devices. That's how DirecTV Now became a reality. What we essentially acquired from the content owners was only that, the ability to distribute their content. To the extent that we want our customers to be able to store their content, once they've paid for it, they would like to store it. We call it a cloud?based DVR. But think aboutjust storing the content. To the extent that our customers would like to be able to take that content and interact with their friends on social media with that content, they?d like that. We gained none of those rights in these negotiations to bring DirecTV Now to market. As we look towards the day after this closes, and we have ownership of the TimeWarner content, with ownership you can begin to do those kind of things. We can give our customers the ability to store TimeWarner content. We can give them the ability to interact socially on "Game of Thrones" and "Westworld" and so forth, that they cannot do today. We are convinced, just like with DirecTV Now, once we got certain content players to come on board, others began to come on board. I am convinced that model will play out again as we begin to innovate with TimeWarner content; giving our customers unique and different capabilities, other content creators will follow. HATCH: OK. And, Mr. Bewkes, just to finish with you and your testimony. (CROSSTALK) HATCH: Well, let me just ask this question ofyou. in your testimony, you say that the TV Everywhere initiative you launched in 2009 hasn't grown the way you hoped that it wouid. 35 of71 . 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition How will this merger help you deliver more content to more consumers more quickly? And to both of you, ask, how will this -- how will this merger affect the prices consumers pay? You?ve somewhat answered that. But if you could spend a little more time on it, l'd appreciate it. BEWKES: Thank you. I think the way that it would advance that effort, which is to put video on demand capability on all our networks, and we hope that would drive competitionto have every network that you have on your television dial be on demand. 80 you could watch whatever network you want whenever you want. You don't pay again to do it. You have increasing numbers of shows. 80 if you find a show in the middle of the season, you can go back and watch the first one and you should be able to watch it on your iPad or on your mobile device without any further charge. We instituted that change and offered it for no charge whatsoever seven years ago. We announced it with Comcast back in that day. And we hoped that all the distributors cable, telcos would pick that up and offer to consumers fult VOD across every channel on the dial, just the way HBO had done again for no extra charge in the '90s and is the way Netflix or YouTube works today. BEWKES: Here we are, seven years later, a great -- in many parts of the country, if people were listening to this, they would say, don't have this in my home. I'm not used to going to Channel 4 and iooking at NBC or watching FX on Demand." We've because we I think if you look at the DirecTV Now offering, we've been saying very publicly for five years we think that consumers need interfaces that work the way Netflix, Xfinity and the way the one works, where it's easy to ?nd shows. It's easy to search across networks. It's easy to do all of that, again, at no extra charge. And we think by putting this competitive offering into the market, where you have full VOD on all these networks that are in your DirecTV package and at a price that's basically it's either half or less than half the prevailing price on average in the country that's going to force competition, both at the distributor leveE, all the other cable and telephone and satellite companies, and it's going to force competition at the network level, where other networks that have heid it back, 36 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition looking to get price increases out of it, realize they ought to just grant it and give people a better deal. HATCH: Thank you. Thank you, Mr. Chairman. LEE: Senator Franken?? FRANKEN: Thank you, Mr. Chairman. I'm a little confused about something. It's this basic premise that HBO, for example, attracts its talent because it for the because it has the widest possible distribution. No, ldon't think that's why talent went to HBO. think talent went to HBO, as I remember, because it was of very high quality and it was actually exclusive. So it's the opposite. In other words, that when "The Sopranosget "The Sopranos." And everybody wanted to see "The Sopranos." So this idea, which is this basic premise that everybody went to HBO because we guaranteed everybody would see you, ain't true. So I don't -- I just don't get that. Now, Mr. Bewkes, you were recently quoted in "The New York Times" article responding to my concerns about how a combined AT&T?TimeWarner could prioritize its own content and restrict other distributors' access to it, you quickly dismissed those fears, saying that engaging in such behavior would not be in the company's best interests. and, quote, "lt would be like selling toothpaste and not putting it in Duane Reed BEWKES: Yes. FRANKEN: 7 It doesn't make any sense. That's your qUote. I'm not sure your it's your analogy that makes any sense. It's not like selling toothpaste and not putting it in Duane Reed. HBO isn't a toothpaste. It's like CVS -- or it could be CVS manufacturing the greatest toothpaste in the world and not letting Duane Reed sell it or, more to the point, it's like selling "Game of Thrones" 37 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition and not letting Comcast subscribers watch it or, very likely you?ll get to answer the question after I ask it. BEWKES: l'm sorry. (LAUGHTER) FRANKEN: Making Comcast pay more for the privilege of having "Game of Thrones? or "Veep" or the rest of the line-up. Now I want to be clear what we're talking about here. Should this deal be approved? Nothing is preventing a combined AT&T-TimeWarner from going to any of its competitors in the pay TV market and charging double for access to "Game of Thrones" and "Veep," et cetera. Or the combined company could simply restrict access to the programming entirely and wait for competitors' customers to flock to DirecTV or HBO streaming services. I don't think these hypotheticals are outlandish at all. You'd have every reason to do this, ifyou could, ifthat would make more money. And this is also to Mr. Stephenson, you'd have you could make more money for in the long run. This is the this is the incentive that's created by the merger. So Mr. Bewkes? I know you're eager to answer this. Do you agree that a combined AT&T-TimeWarner will have greater leverage when negotiating program carriage with other content distributors as a result of this deal? And do you agree that a combined AT&T?TimeWarner would have a financial incentive to use this leverage for its benefit? BEWKES: May l? OK. (CROSSTALK) FRANKEN: 38 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition There was a long pause there. BEWKES: sorry I was so eager to answer. No, I don't agree. i don?t think it would have -- it would not have the incentive nor would it have the ability to do that. It may require a back?and-forth. But let me try to answer the first part. No. the -- we don't -- all networks, whether it is NBC putting on the show, "BEindspot," the show is on NBC. It?s exclusive to that's where you have to go to watch it. If you want to watch ?House of Cards,? you (CRossnuk) FRANKEN: You didn't have to pay to get NBC. BEWKES: Yes, you did, sir. You had to subscribe to $80 to $120 of network fees so thatNBC could get paid that way. If you're talking in the case of HBO, Nettlix, Showtime, those are a little FRANKEN: No, well, and wait a minute. There's a distinction between HBO and NBC. BEWKES: Yes. FRANKEN: BEWKES: Yes. FRANKEN: And HBO costs you money. You had to pay for that. NBC came with tree, with the package, whatever package you have. In fact, you used to be able to watch every TV show for free. 39 of 71 7/7/201711122 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition BEWKES: Right, so I think we all remember that term, pay TV. That was HBO, Showtime, Netflix, et cetera, where you have, as a viewer, the choice to either pay to have it in your home or not pay to have it in your home. And when you decide to buy that network for the month, you then get the shows on that network, "House of Cards" on Netflix, "Billions" on Showtime, ?Game of Thrones? on HBO. Those are premium services, there's no advertising. If you don't like the content because of its nature, you don?t have to have it in your house. It's quite a different business. But what I was saying in the analogy is right on the toothpaste, is it would make no sense and, in fact, we could go into it -- to hot sell HBO on the Comcast cabie system, on the Verizon cable system. It would make no sense not to offer it. FRANKEN: Yes, would it pay -- make sense for to use its leverage to charge Comcast more? BEWKES: No, because we don't have the market power to do something like that, either at or at HBO. The market's way too competitive for that sort of thing. And remember FRANKEN: I really think, though, Mr. Kimmelman might disagree with you. BEWKES: Well, there's no history ofanyone pulling off something like that. And this company is certainly not big enough at either end to do that. FRANKEN: IVlr. Kimmelman, do you have any thoughts? Well, it's this very concern that, again, NBC, you know, these are wonderful business men. You know, I understand their goal as to what they're doing with their business. NBC said the exact same thing. I'll just say the enforcers found that there were these incentives; they imposed limitations or would have blocked the transaction there. This is even larger. And I'll 40 of71 7/7/201711:22 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition FRANKEN: And did they live up to the conditions? KIMMELMAN: Some. But there have been a lot of problems, I think companies like Ms. Ziman's company would not have the resources to take even advantage of those tools. I think there are significant difficulties with conditions which we could get into later. But there has clearly been a history of this kind of favoritism and discrimination. Hi just remind you the bipartisan Congress in 1992 stepped in and required cable to sell its products, TV networks, that were they were vertically integrated to satellite in order to aliow satellite to get access to the product. You could have made the same argument, why wouldn't we want to have more people getting it? Because it was a competitor to cable. l'm not worried about Comcast not getting TimeWarner content in this instance. l?m worried about the online distribution that would compete with that is'growing right now, not being able to get exactly what it needs to be a real competitor. FRANKEN: Well (inaudible) a second round of questions. Will there be (inaudible)? (inaudible) you very much. And ljust -- oh, (inaudible) so l'm over my time. But I just want to say that I remember that people flocked to talent flocked to HBO because it was a premium channel and that you people had to pay to go there. STEPHENSON: (inaudible)? I didn?t get a chance to respond to Mr. Franken? FRAN KEN: The chairman. STEPHENSON: Yes, senator i just want to make a point that anybody, though, any household in 41 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition America and today any person with a mobile device can subscribe to HBO. i think that was the point we were trying to make. It's not exclusive to anybody. it's broad distribution that anybody can (CROSSTALK) FRANKEN: . talking about now. I'm talking about what built the franchise of HBO. And it was a completely different premise than what Mr. Bewkes was presenting in his opening. FRANKEN: And ljust wanted to make that point, that it was not what attracted great talent to HBO. It was in a different model. And what built that franchise was a completely different model. We'll get to -.. I want to get to some other questions later. LEE: Senator Perdue? PERDUE: Thank you (inaudible). You know, in my business career, it seems to me that this economic miracle that we've enjoyed here over the last certainly 70 years, 75 years, was built on innovation, capital formation and the rule of law. And this concept that we're talking about today, this vertical integration, by the way, is not a consolidation. I think that's very plain and we need to remember that in the committee. But this is -- this economic miracle was built on transactions just like this in other industries. Vertical integration is nothing new. I personally have participated in it, in order to compete, not to dominate. Size today doesn't necessarily correlate to dominance. When you talk about innovation and technology changes like we're talking about today, in this industry particularly the consumer has benefited from the aggregation of the ability to (inaudible) as Mr. Stephenson said (inaudible) comment, they (inaudible) the most content to the most people at the lowest cost. That's called capitalism. if they don't do that, they won?t be able to compete. Mr. Cuban, you said something earlier that really resonated with me, you commented about to watching TV and watching young kids today and how they consume input is totally different than we all -- when we all grew up. But I think sometimes being in the Senate is like watching TV, too. You think you're 42 of71 7/7/201711:22 AM CQ.com - Senate Judiciaty Subcommittee on Antitrust, Competition doing something but you're really not doing much. And (LAUGHTER) i hope that today will be a little different. And I want to get your perspective because you're in a Unique position to have a unique perspective on this transaction. I would have thought you would have been a witness for an anti-position against this deal. And i want to talk about your experience and the roadblocks you had to innovation in getting your content out there. And are you concerned about the combination and the size of this deal harming your ability to be creative and innovate? CUBAN: Let me give you some background. I own AccessTV and Movies. We were -- AccessTV started off as which was the first all high-definition TV network. And it was absoiutely independent and we continue to be independent. And too let me also add something that Senator Klobuchar suggested, that because they own the Dallas Mavericks, that improved my ability to get carriage for AccessTV and Movies. Well, TimeWarner Cable is the incumbent cable network in Dallas and have not been able to get carriage there. So I've faced the challenges. I also own Magnolia Pictures, which is a movie distribution company; Landmark Theaters, which has 300 screens and is geared towards independent movies and have produced -- and produced movies through a company called 2929 distribution. Some of the movies were "Enron: The Smartest Guys in the Room," which got nominated for an Academy Award and "Good Night and Good Luck." And "Good Night and Good Luck," as an exampie, we weren't big enough to distribute it. So we worked through Warner Brothers to distribute, to get full distribution. There are just -- we have to compete. As an independent network, i feel the pain that Ms. Ziman feels. There -- you know, at AccessTV we geared gear ourselves as a music network geared toward the 45?plus. We don't like to tell our advertisers that but that's who watches more TV. And it's a challenge for to us get distribution. But with the new methods of distribution like DirecTV Now and others, Slang (ph) in particular, that has opened the door. in the past, we were -- the distribution was constrained, as Ms. Ziman mentioned, because of bandwidth. There just -- you couldn't put on another high-definition network, particularly with standard definition which took up even more bandwidth. And so now with new methods of distribution, there's new hope. There's more hope for independent networks like ours. And i think this merger opens those doors. You 43 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition know, as an example on DirecTV Now, AccessTV is distributed in their $35 bundle. Movies is not. We've got to do a better job at Movies to convince them to carry us. That onus is on me. And so, you know, to your point earlier, it's very competitive. It's a free market still in a lot of respects and I think this combination opens doors. I think they recognize now that bandwidth is more available through online offerings. They can support more independent networks, more minority?owned networks. And we've seen that start to happen. And I think the combination of them owning content, you know, there's a lot of things when we took at online content and, particularly, television distributed content and we say, why don't they do that? And itjust makes perfect sense for us to have remote DVRs or other features. And, as a content owner, it's like I'd love to offer those features as a smaller content owner. But until the big guys start doing it and set the precedent, us little guys don't get to offer it. So these new precedents that are set, I think, will really push the way for better services and more consumer friendly services and really expand the ability for independent networks to compete. PERDUE: Yes. Thank you. Mr. Bewkes, could you taik about what factors today add friction to your ability this is pre-deal, before the deal, as you exist today, what causes friction to your ability to innovate? And how would this merger with help your content developers provide better and quicker and cheaper content for consumers? BEWKES: OK, thank you, Senator. The main friction now is that we have to put our networks through the existing cable satellite distribution plant, which had a certain technological ability to it; Only, recently did it have the ability to do video on demand. And increasingly we're competing against video being delivered over broadband only that has full two?way video on demand. And where the broadband services have the direct retaii data of what you're watching, who you are, where you're buying your stuff, so it implicates advertising and subscription. What we've been trying with HBO first and then with Turner second -- but we really have all we haven't been successful in the broad 44 01?71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 100 channels we've all got in our homes. We tried to make our channels all video on demand in a way where you could go as a viewerand search back and forth, watch full seasons, really get the same because there's more and more networks and content avaiiable. You need to be able to search for Netflix or on an Apple TV or that kind of a thing. Most of the distribution companies, particularly cable companies, have not uniformly offered that. And the way that American consumers get a change in their habit about something as important as television is it has to be consistent across all the-channels and it has to be nationat. And we think if we can get this going, competition with lower prices, better, smaller bundles, more effective advertising can bring more competition in all of these areas. We don't obviously and we can't determine what all the other media companies do. We don't have that big of a market sharecompetitive innovation in the hands of consumers, we think consumers liking it can get those changes to be universally adopted. That would give us a chance against these giant technology companies that, by their own definition, have massive global scale. PERDUE: Thank you, Mr. Chairman. have other questions I'd like to submit to the witnesses in writing. LEE: Without objection, they'll be admitted, thank you. Senator Blumenthai? BLUMENTHAL: Thanks, Mr. Chairman. Thanks for having this hearing. And thank you all for being here. have serious concerns about this transaction. I have yet to be convinced that the benefits outweigh the harms to competition and possibly to consumers. It is a vertical merger. It doesn't take out a competitor but it potentially has seriously negative impacts on competition and on consumers. And it is different from the NBC?Comcast merger, which, as Mr. Kimmeiman points out, has had problems itself and had to be modified by regulators. It involves wireless. It's a national platform. And it involves more than one platform. But speaking very biuntly, what I think, what any of my colleagues think, may make 45 of 71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition no difference whatsoever because Donald Trump has said he's going to block this merger. And I take him at his word. VVhy? We operate as an act here. (LAUGHTER) I know that, Mr. Stephenson, you've met with the Trump transition team. Have you met with the Trump transition team? STEPHENSON: No, Senator, I have not. BLUMENTHAL: Well, then what remains on the record is that the president of the United States -- or I should say the future president of the United States has said he's going to block this merger and he said it emphatically and unequivocally. And he has said it because and quote, "It's too much concentration of power in the hands of too few," end quote, a classic antitrust analysis from the president- elect. Now, I'm a strong supporter of antitrust enforcement and I may well agree with Donald Trump. What concerns me is the reason that he gave -- an additional reason -- which is that he is very unhappy with the CNN news coverage. And for a public official to use the blunt, heavy instrument of law enforcement to try to silent or change coverage by a news department of any company is, for me, absolutely abhorrent. Would you agree? STEPHENSON: You're referring to me? I'm sorry. 46 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition BLUMENTHAL: I'm asking both you, Mr. Stephenson, and Mr. Bewkes. STEPHENSON: Senator, I'm a novice in the world of politics so I would struggle to engage at that level. My expectation was, when we announced this deal and is today, that the Department of Justice will be the one reviewing this transaction and making the determination whether it's competitive or not and is it competitive under the law. And so our expectation is to present our facts. We actually believe the facts are going to be very compelling and very good that this is pro-competitive and pro-consumer. So I'll leave it at that. BLUMENTHAL: Mr. Bewkes? BEWKES: Yes, and entirely agree with what Mr. Stephenson just said. In temples of the independence of ourjournalism -- and I hope all the other journalistic outlets -- we have always vigorously defended that for decades, whether when we were at Time Inc, whether and when we have CNN. And we intend to continue defending and being an independent journalistic voice. Everyone that watches us may have their own opinion about whether we succeed in being objective. We try hard every day and we're going to continue to do that. BLUMENTHAL: You understand that What troubles me is that the president-elect has said that his Justice Department will enforce a different standard of law, depending on what kind of coverage his administration receives. Will you commit that your news coverage will in no way be influenced or impacted by what the President of the United States says about this transaction? BEWKES: Yes. BLUMENTHAL: Mr. Stephenson? 47 of 71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition STEPHENSON: Yes, sir, of course. Yes. BLUMENTHAL: And wouldn't you agree with me that for anyone in the Department of Justice or any law enforcement agency to threaten or use more vigorous or aggressive law enforcement, in effect, in retaliation for news coverage that doesn't please that public official would be an abuse of power? BEWKES: I would if you're asking me. BLUMENTHAL: I'm asking you and I'll turn to other members of the panel as well. but you're the ones who will be making decisions about BEWKES: Well, I BLUMENTHAL: -- and, by the way, the president has made similar kinds of remarks about NBC and about "The Washington Post" in terms of the enforcement of laws potentialiy against them -- the president? elect. BEWKES: May make a comment? BLUMENTHAL: Please do. BEWKES: I don't think we should be selective about retweeting here or restating the various comments that various elected officials or those running for office made upon the announcement of this merger because there were comments made by candidates on all sides, including Mr. Sanders, Mr. Kaine, saying that they were against the merger, again, before any of them had the information. And what Randal! and I are saying is that we're confident that once everyone and including the questions you've raised today -- hears the facts and has the 48 of7i 7/7/201711222 AM CQ.com - Senate Judicialy Subcommittee on Antitrust, Competition appropriate competitive analysis on this that it will be seen and concluded by everyone, even with the concerns you've stated, that this will have pro-competitive effects that will benefit both competitive structures, diversity of voices and consumer price alternatives. We believe it and we think we can prove it. BLUMENTHAL: And just want that -- I want -- I want to make clear that my point here is not that other candidates may have commented or not about this merger. It is perfectly appropriate for a public official or a candidate to comment on the merits of anti-trust enforcement. But to threaten more vigorous or adverse enforcement against a particular company because he doesn?t like the news coverage, is a threat to the First Amendment. That's the fundamental point here. l'm a believer in strong antitrust enforcement. welcome President?elect Trump?s interest in this area. i find absolutely abhorrent the threat against a news organization based on its content of more vigorous or adverse enforcement against it simply because of a dislike of that coverage and I welcome your commitment that his statements will have absolutely no impact on the content of coverage. I hope the same will be true of NBC and the Washington Post because this kind of potential abuse of power is a threat to fundamental liberties way larger than the issues we're discussing right here. Thank you. LEE: Senator Tillis. Senator Tillis, you're up to bat. TILLIS: Thank you, Mr. Chair. i want to get back to the merger and the potential acquisition. (LAUGHTER) And actually, i would like to start, Mr. Bewkes or Mr. Stephenson, if you could briefly explain to me how this DirecTV New product that you're offering and distributing through network, how that how you may enter into other relationships with other wireless providers to accomplish the same thing and how would those transactions look? STEPHENSON: Yes, thank you, Senator. 49 01?71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition Actually, we stole the concept for DirecTV Now with free data included from prior deals that we have done. In effect, this premise of free data, if you wilt, with DirecTV Now, it actually goes back decades. The first instance of it was a 1-800 service when you called Sears Roebuck. You dialed 1-800 and Sears Roebuck picked up the tab for the picked up the tab for the tong distance service. And that actually drove long distance prices down over time. I mean, all of a sudden, everybody started using that type facility to get people to call their franchise. So, what happened then in 2008 is Amazon launched a reaily groundbreaking product called the Kindle and we did a deal with Amazon where they actuaily when you delivered a book to the Kindle, you paid $10 for your book, that included the data charge. Amazon paid directly that data charge. That's the concept that we took advantage of with DirecTV Now. DirecTV is paying the charge for the data to the mobility business. And by the way, that is ou:r lowest wholesale rate available in the marketplace today to DirecTV, to Amazon, to any big, smail, medium sized company that wants to do this same approach. We're actually convinced thatjust like 800 service drove long distance prices down, this will also drive video prices down as people begin to leverage this same capability. I think that's right. And Mr. Cuban, almost hesitate to even speak with a Hoosier after the devastating loss of the Tar (LAUGHTER) a week or so ago, but I'm going to anyway. In your opening comments, you were really talking about the disruptive nature of other content providers today and I saw you shake your head on a couple of occasions when I think what we're trying to do -- your comments kind of suggested that you?re trying to skate to where the puck's going to be. CUBAN: Correct. TILLIS: And a lot of this discussion is where the puck is today. CUBAN: Without question. 50 01?71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition And if we don't look ahead, then some of these premier providers are going to be hamstrung against other ones -- against other disruptive forces that could ultimately, I think, create a consolidation and upward pressure on prices. Wouid you agree with that? CU BAN: Yes, sir. There's already a consolidation that we don't see going on. When I went through the list with Facebook, Amazon, all the content -- the primary content that they offer came through acquisitions. Their biggest content plays were acquisitions. What's happening now, though, is they're not acquiring big companies like Time Warner. They're acquiring disruptive companies that are choosing not to go public for $100 million or $1 billion that flies completely under the radar and that's how they're competing. CUBAN: And I'll give you a perfect example how the nature of and it's kind of silly, but how the nature of content is changing. I wanted to test Facebook Live just to see what kind of audience I could get. No lie, i took my breakfast, empty plate, one pepper on it, put up a Facebook Live, and within a minute, I had 1,500 live viewers. Within 30 minutes, I had 10,000 live viewers. i thought, OK, maybe that'sjust Facebook Live. It's new. i went to a new platform called Lively. was with my kids. Again, I try to be a geek and keep up with this. were going down a slide into the lake. And just put it on them. On Lively within 20 minutes I had 35,000 live viewers. For an independent network, 35,000 live simultaneous viewers is huge. That's changing the nature. CNN, a great program, is 2.5 million viewers watching it at a given point in time. That's nothing on Facebook live compared to and other platforms. It's changing whether we want to admit it or not and that's having significant impacts, and really the biggest challenge is getting people to watch TV. That's going to be -- you know, with all these things, you're hoping to find new ways where people go back and say, OK, I want to try watching TV again, and that will increase (inaudible) and we see it with the NBA, we see it with the NFL and all forms of content. And think something else that one of my colleagues mentioned was -- well, first off, ifl look at HBO, HBO became a premier channel not because they charge people to watch it but because they have extraordinarily good content. Extraordinarily good content that people were (ph) willing to pay a premium for. 51 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 But there's a lot of times when l'm channel surfing, which usually happens late at night, when l'm back in my I don't get to channel surf as much when l'm at home because my wife can control the remote. But when l'm looking, l'm going through all these channels, l'm going, why am I going through all these, and am paying for them? NBC is not free. ABC is not free. They're all negotiating some baseline cost that go into your baseline cable biiE, and I would like to reach a point in time where have the freedom to have options. A sportsless option seems like a very sad place to me, but some option, to where I don't necessarily have channels that I consider extraneous based on my viewing habits, and then from time to time, I will pay a premium if I want to go and access content that may be on a channel that I would not regularly want to pay for because I don't have a need or a desire to have that. That's the model that we're getting to. And i think if we don't, as a matter of -- I'll leave it to the antitrust division in the Department of Justice to ask you the right questions to make sure that you're not wading into any antitrust areas. But if we as a body (inaudible), if wejust continue to focus on where the puck is versus where the puck is going to be in terms of content delivery, and this industry 10 years from now, then I think we're going to disadvantage some reai innovators. There's some legitimate issues that need to be addressed, but we need to be very, very careful or we?re going to cause some of the leading innovators in the world not to be able to innovate because of constraints we're putting on people using old world models to assess where the new horizons are for content delivery. Thank you. LEE: Senator Flake -- FLAKE: Thank you, Mr. Chairman, and thanks for having this hearing. It's been enlightening. l'm trying to view this all through the lens of my own kids. have two married kids, newly married, who wouid no more sign up for DirecTV or Dish or Broadcast than they wouid to get a land line in their home. That's just not something they would consider. They might try to crib off of my DirecTV, ?nd out the password and use it, but they would never think of that. And that's why when I hear Mr. Zimmerman talk about this and the competitive angle, it seemslike an excellent argument you're giving that would have been more appropriate 10 years ago or 15 years ago. But it doesn't seem to be where the puck is, or certainly where the puck is going. I think we have to consider more who the competition really is, that this isn't traditional antitrust competition among broadcast media, but among the edge 52 of 71 7/7/20171122 AM CQ.c0m - Senate Judiciary Subcommittee on Antitrust, Competition providers. And Mr. Cuban, you talked in your statement about the real competition. I Do you want to talk a little more about that? About who the real competitors are. CUBA: mean -- we apps compete for our time now. When as i mentioned, when we look for something to do, a way to kill time, we look at our phone. And all you have to do is look at the rise of Snapchat, the rise of Musically, the rise of Lively, the rise of lnstagram. That's what consumes our attention. Kids don't go to TV anymore. You mention your children. have a seven?year-old and I went to help coach his baseball team and none of them knew the ruies because none of them ever watched TV and watch baseball like we grew up doing. They didn't know the rules for football. l'mean, i can't even bribe my son to go to a Cowboy game. That's just not how it is. But if take away his Minecraft videos, he throws a hissy fit. And, sure, our consumption habits change as we age but and I'm sure they will for all my kids but, at the same time, on-demand, in-hand viewing through streaming is how people consume content. And it's going to be a challenge and I think they face additional challenges from a tech perspective. You know, Randall mentioned 56 coming along and i think it will get here sooner rather than later. There's going to be people cutting the broadband cord. And just like you mentioned your kids never would have thought to buy a land line, i tend to believe that there will be a point in time where we won't think about wired broadband as being commonplace. And that's going to create a whole new list of challenges for them. So, you know, technology marches on, whether we like it or not. And I think we can't look backwards and look at historical norms in order to predict the value of this merger. (UNKNOWN) . When Senator Blumenthal talked about the incoming president talking about going against this merger, simply because of the size of it, how does this size of the merged company, how does the size compare to the real competitors we're talking about, some of the edge companies? Any figures there? Mr. Randall (sic)? STEPHENSON: Yes, Senator, if you put our two companies together, the combined market cap, 53 of71 7/7/201711222 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition I depending on the day you look at the market, is $300 billion-$350 billion. The companies that Mark has referenced, whether it be Google, Facebook, Apple, these companies have market caps that are about two times that size. So as we talk about size and the significance of size in a deal like this, I think we have to recalibrate what size means in this new world because we're about half the size of most of these companies that are really providing the competitive threat to our core businesses today. (UNKNOWN) All right. Mr. Kimmelman, do you have any response to that in terms of where -- are we discussing what the market is or it was a few years ago? KIIVIMELMAN: Senator, I totally concur in your assessment. My kids do the same thing as yours. I think we should skate to where the puck is and we should look at where the market is going. l'll just note, on the margin, young people are doing different things; 90 percent, though, plus of the revenue comes from a lot of the traditional sources and the companies will skate to where the puck is. They will try to control as much of that new distribution as possible. On the online platforms, i totally agree, there is a lot of attention. But what we used to do on phones a lot of kids are now doing on Snapchat. What we used to do in terms of listening to records is now iTunes. It's not that TV has disappeared or video doesn't matter, it's people are doing it in new forms. 80 I'm all for looking at who the other players are but none of them charge me $200 a month to get access to that online content. That's where your kids get it. And if they're if they're mooching off of your DirecTV, that's probably why -- they don't want to pay $200 a month to get all this stuff. So somebody's paying and I just want to make sure it's a fair price. But there is no question that the online platforms are going to be big players here. But they don't control that wire, wireless, whatever it is, even if it's not wired, broadband, satellite, they don't control that into our homes. And you can probably only get it from a coupie players. That's where there is an antitrust probiem. That's where there's a control problem that we want the enforcers to look at. (UNKNOWN) 54 of 71 7/7/2017 CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition Is that -- is -- who's paying for content, is that really relevant to the competitive nature of these kind of mergers? Mr. Cuban, do CUBAN: Yes, I would say if you aren't paying for the content, you are the content. You know, you're being sold and advertising is paying for it. And I'd also say like my 10-year-old daughter doesn't have a cell phone account but she has a phone and she gets access to wireless through wi-fi at various distribution points and she knows where they are and she goes there -- and I'm not just talking inside my house, I'm talking outside the home. So the notion that a wireless provider is the only way to access this content isn't necessarily the case anymore. And those optionsare expanding rapidly. I'd also say to respond to Gene that Flurry, which is anapp monitoring company just came out this week and said, for non? traditional, TV?type content, all consumers are consuming 133 minutes, more than two hours per day, of non-TV?like content on their phones. The world is changing and how we consume it is changing and it's not driven by pure mobile. FLAKE: Thank you, Mr. Chairman. LEE: Thank you, Senator Flake. We're now going to start a second round of questions. lVlr. Stephenson, let's go back to you. Section 5 of the FTC Act, as you're aware, permits the FTC to take action to prevent, quote, "unfair or deceptive acts or practices in or affecting commerce." However, that provision contains a carve?out. It contains an exception for common carriers and, as I'm sure you're aware, the US. Court of Appeals for the Ninth Circuit recently extended this exception to cover even aspects of and its activities that are non-carrier activities. Is it your position that TimeWarner's business will become exempt from Section this transaction is approved and kicks in? STEPHENSON: Yes. I'm not a lawyer so I'll try to address your question as best I can. 55 of71 7/7/201711:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 Obviously with the net neutrality provisions, is our privacy standards and so forth are under the purview of the FCC. As with TimeWarner, so Verizon has the same issue of buying AOL, buying Yahoo! 80 Comcast and NBC, you have this same issue, where there's this confusion about a content company under the purview of the FTC, a common carrier, per se, is under the purview of the FCC. it is confusing. And I would suggest that this is an area, perhaps, where Congress really should consider taking up bringing some clarity because it's not that we have regulation gaps in this area; it's that we have regulation overlaps. And it is a bit confusing as to who controls who (sic). So I would actually encourage perhaps maybe some legislative effort to address this issue. Sure. And get that. get that we have some regulation overlap. We?re not talking about regulation overlap here; we're talking about a gap. We're talking about a carve?out and I can -- I would imagine you would have to agree that if that were the case, if the exemption for Section 5 currently enjoyed by also extended to TimeWarner, if this transaction were completed, that would be cause for concern by some. I assume you would acknowledge that? STEPHENSON: Yes, i believe the law is that, if owned TimeWarner, they would come under the FCC's purview in terms of regulating these issues. LEE: OK. I've got a another line of questions I'd like to extend both to you, Mr. Stephenson, and to Mr. Bewkes jointly. So when Comcast and NBC completed their merger back in 2011, you recall there were some concerns expressed by CNBC and others and the -- or rather concerns expressed by Bloomberg and others relative to CNBC. And there were conditions but in place to guarantee that Bloomberg would have access. It ended up taking three years of litigation to bring that about. Shouldn?t we be concerned about the possibility that any conditions put in place here, designed to guarantee access to your network, might not be followed, in much the same way that this required three years of litigation, expensive time-consuming litigation, occurred in the wake of this other merger? STEPHENSON: 56 of71 CQ.com Senate Judiciany Subcommittee on Antitrust, Competition I've been asked a lot about conditions imposed on other companies in this regard and I'm not knowledgeable about the ability of those companies to comply with those conditions. I would tell you we have had several mergers where conditions have been posed on us. I think you would find that our track record in adhering to those has been very strong. I would also suggest that the Department of Justice has not seemed to have any lack of resources in pursuing areas where they believe we were out of compliance with conditions. And so 1 fully expect that, if any conditions are applied to this particular transaction, we'd comply with those just as we have every other transaction. LEE: Did you have anything to add to that, Mr. Bewkes? BEWKES: Yes. i think the same is true in the history of TimeWarner. We had a merger with AOL, where some agreements on carriage of other networks were made and they were followed with no incident. And the in the Turner and TimeWarner merger, we had conditions which also were followed without incident. So'our record is without there is no instance in which we did not comply with any conditions we had in our various mergers. LEE: All right. And, of course, I'm not talking about your companies in particular but your companies in particular are the ones that want to become one company right now. And you can understand why some people would express this concern when you do own some news entities and there are other news entities that have expressed concerns that they might be blocked out for one reason or another, either through pricing models or as a result of where you locate them, what number they are assigned, what channel they're assigned, whether it's put in the same grouping as other news outlets or otherwise. Do you understand why people might have that concern? STEPHENSON: Yes, sir, I do and i don't i don't think those are terribly unique to other concerns people have expressed in past mergers that we've been a part to party to. And I do believe that that those have been adequately addressable with concessions and conditions. 57 of71 7/7/2017 11:22 AM CQ.com - Senate Judicialy Subcommittee on Antitrust, Competition And again, I will repeat, I think both companies have a stellar a flawless track record in complying with those conditions. LEE: Ms. Ziman, you state that over?the-top distribution is, as I believe you put it, a one-way ticket to bankruptcy. Can you explain why this is not what you would consider a viable business model for independent netWorks? ZIMAN: Well, right now the OTT market doesn't have the amount of subscribers that make it a business. Number one, it's a maze of confusion, as I said before. it's a search engine nightmare for a lot of people that aren't used to it. Mr. Cuban's children are much more used to it than some people that are a little older. But at the same time, in order to get, number one, license fees, that's impossible. And in order to get advertisers to advertise with you, it's such a small market, it wouldn't work. Plus you need to be able to use the linear service in order to actually get your brand known to the public and, at the same time, you need to be able to show the public that you're delivering a network that is curated and that meets their interests and their needs in order for them to then also want some VODs of a the OTT market. We are actually distributing as Cinemoi over the OTT market. But the reality is it's a very fragmented market right now and confused market. And, therefore, if we relied on it solely, it would be a one- way ticket to bankruptcy because you can't survive. You have the obligation -- we are all gatekeepers to the communication media. That's a fiduciary responsibility, to deliver to the public content that is quality oriented, that they deserve. That means that you have to spend money in either licensing content or original productions. disagree with some of the people that think that HBO is there because of distribution. HBO is there because of quality. Many people, many stars, come to us as a small company and give their services for very small amount of money because of the quality of the programming that we ask them to participate in. The reality is we still have to spend money. We still have to convince advertisers to go along with some of this. That's impossible. In order to get an advertiser interested, you have to have a distribution of 55 million subscribers. That's almost impossible right now because the are shutting the doors on independents, on innovation, on good quality, original programming. 58 of71 - CQ.com - Senate udicialy Subcommittee on Antitrust, Competition Unless you are bundled, you don't have any negotiating power. mean, Mr. Cuban is partners with CBS. It's a different story. And even he couldn't get a TimeWarner. It's an impossible marketplace right now. And we need to improve it. And ifwe really look at what is happening here, we're moving towards an oligopoly. And if you look at Taiwan, for instance, where six conglomerates own all the media, when they want different content, they simply trade at the cost of the public, which is rising and rising, and at the cost of free speech. LEE: Thank you. Senator Klobuchar? KLOBUCHAR: Thank you very much. I apologize for leaving briefly. Senator EVlikulski was giving her closing speech of her career and then we were -- had big event on Cuba and I carried (ph) the bill to lift the embargo. So as opposed to Mr. Cuban, was with the Cubans. So I wanted to kind of go back to some of these cost issues. Mr. Kimmelman, the money the typical American household which you mentioned spends on these services, $2700 per year, continues to trouble me and I'm concerned that this transaction won't reduce that burden and I think you argue there could be a chance that it would increase it. Is this a legitimate concern? And why? KIMMELMAN: Senator Klobuchar, I think that that's the baseline and it is the result, if you look at a 20-year period, of consoiidation and limited regulatory oversight during periods of that that have enabled prices to be in?ated. There is competition on the margin, there's new competition coming from new sources, but it's hard to squeeze that out. I will say that with what is being offered now in the market that includes what Time Warner is offering and there is hope. The online platform is opening up some and they?re offering new products and new services and some at lower prices. The real fear is whether the combined company once it gets -- looks at its overall interests will favor itself and potentially harm competitors. KLOBUCHAR: Right. KIMMELMAN: So that's Where the rub comes on the prices. They might offer a better price and they may offer it for some time, but in the long run will the competitive process be 59 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition 0003 benefited? That's what I think the enforcers need to look at. KLOBUCHAR: So you see this as a -- there is a chance that it could be another model rather than just cable? KIMMELMAN: Absolutely. In some ways, I think that's our only KLOBUCHAR: OK. KIMMELMAN: for all the reasons everyone here has stated. KLOBUCHAR: OK. But you're concerned about a few things. One is that the prices may initially I think you know, whatever it is, $60 or something, and then it goes up and that it would be $35 for 100 channels, but then it goes up. And so you're worried about that and you're also worried that there would be less competition for, say, content and things like that and eventually we have problems because of that. KIMMELMAN: And KLOBUCHAR: And you KIMMELMAN: Yes. KLQBUCHAR: could build some conditions into that or not? Well, let me just say, part of the reason for the longer term concern is that Comcast already vertically integrated and has all the NBCU suite of programming. Here, you have Time Warner programming. Now, will they compete aggressively against each other? I certainly hope so. But in 60 of 71 7/7/201711222 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition a market where there are few vertically integrated companies, there is a danger that they will buy more, CBS, Viacom, who knows, to escalate against each other but also possibly follow the same basic market business structure and deal with each other maybe even at pretty high prices because they pass those on to the consumer in their own market, but then charge them through to every other distributor in the market. Now, again, if if somebody can come up with something comparable to HBO, they can compete against it. It's been tough, there are only a few major content providers that provide that high- quality professional content and we tend to get locked into that. So yes, you buy other things on the side, but that just means you're paying more for other things. That's why the bill is so high. KLOBUCHAR: And Mr. Stephenson, just -- I know you're gonna answer that, but so $35 for 100 channels is a good deal, but isn't that an price and it's going to go up to $60 or something like that? STEPHENSON: These two go together, but I think it?s important to understand why we put a $35 product out inthe marketplace, and it's because the other system, the old system is just flat out broken. Content costs continue to escalate, cable bills continue to go up and we're at a $100 average cable TV bill and 20 million households have opted out. They've left the system. They said we don't want this product anymore, it's too expensive. So we brought this product to market to address those 20 million households and it is proving we found the sweet spot. So it's not as though we have pricing power down here. The pricing power doesn't exist because the customer said we opt out if you don't meet this price point. So we have tried to get the cost down -- the content cost down, the distribution cost down, no set top boxes to ensure that we can get into a market and hit a price point that the customers will come back into the pay TV system. And they're doing it. I think as soon as we think we can begin to move prices up and take advantage of that, they have demonstrated they'll leave us again. So i think we're bound on this and I think we have we've reached a place with the consumer that they're happy and I think they're willing to enter this marketplace again. KLOBUCHAR: To get at some of Ms. Ziman's points, in your testimony, you say, Mr. Stephenson, in short, we are still going to purchase high quality content from atl corners of the content community and we'll continue to distribute Time Warner programming 61 of7l 0003 7/7/2017 11:22 AM CQ.com - Senate Judiciaty Subcommittee on Antitrust, Competition widely. Am I understanding your position correctly then that after the acquisition, would not discriminate against independent content providers in favor of Time Warner content? STEPHENSON: i don't think we have a choice. The business proposition is you better have a wide array of content, there are too many alternatives, you will lose customers if you do not. Now, I think we've pointed out an interesting dilemma here. We want a broad, wide range of content brought into this ecosystem and everybody wants to be paid for their content whether it gets broad viewership or not. At the same time, we're being challenged can you get prices down, get prices down, get prices down? The two are inconsistent, all right? So we have to figure out what content do the customers want, not what do we want, not what does the government want, but KLOBUCHAR: STEPHENSON: the customers want. KLOBUCHAR: Get it, but you at the same point, what I'm asking about is would you discriminate against non-Time Warner content STEPHENSON: No. KLOBUCHAR: OK. STEPHENSON: Again, I don't see -- there?s no advantage to it nor would we do it. KLOBUCHARdetermine at this point where contract negotiations between providers and distributors are long, difficult and complicated, how do we determine whether has lived up to that commitment? 62 of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition STEPHENSON: I think we ought to allow the Department of Justice to formulate an approach for doing that. KLOBUCHAR: OK. lVir. Bewkes, my last question here. In your testimony, you explained that quote, "Time Warner's goal has always been to distribute our content broadly across all distributors and platforms." So am understanding this correctly, that after the acquisition, Time Warner wilf not limit the availability of Time Warner content to content distributors that compete with BEWKES: Right. Correct. KLOBUCHAR: OK. And we've heard that one can deny content through the offered terms and prices. How would we determine that or that you were living up to this commitment if there's some kind of discrimination based on prices? BEWKES: Well, again, i think the DOJ will be able to easily see that. We?ve got fairly uniform contract provisions across all distribution platformsyou think of Verizon, Comcast, afl the different companies, they've all -- quite vigorous in the negotiation and they're -- it's a very competitive situation, so everyone would know because they would not accept terms that were not equal for what they could get on other -- from other content providers. KLOBUCHAR: OK. My last question, lVlr. Kimmelman, just because I've had some of the incomings (ph) of some of these complaints, the Comcast?NBC Universal merger was approved with conditions, as you know. How effective do you think those conditions were in preventing anti? competitive harm? Because I think it will inform the Justice Department and agencies and this committee as we go forward in terms of what conditions we think would be appropriate. KIMMELMAN: Senator, I think it's a mixed bag. I mean, I think that the fact that Netflix has grown, the fact that Sling TV has been able to get Comcast, NBC programming are the 63 0f 71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition more positive signs. Some of the big companies have been able to take advantage. of that, i think smaller companies have come up short. Even Bloomberg went through a (CROSSTALK) KIMMELMAN: excruciatingly painful dispute over that. I mean, the problem with the problem with conditions is exactly the questions you were just asking. Is it discrimination? Are the prices the same? Here, it's even more complicated than with Comcast because it's nationwide distribution. It's wireless, which has inherent latency problems and issues where the bandwidth isn't enough and there's some legitimate reasons why you're not getting the quality you want. But then there could be some finger on the scale. And I will say that as much as I firmly respect the Justice Department's ability to enforce conditions, I know they do not have the engineers and the network experts to look at all these kind of issues, they're very aware of that. So these are very difficult areas to thoroughly police if there is an inclination to discriminate. KLOBUCHAR: Very good. All right. Thank you, all of you. LEE: Senator Franken? FRANKEN: Thank you, Mr. Chairman. 80 I Googled on my phone Wayne Gretzky and where the puck is going. (LAUGHTER) And the first -- first entry is in the annals of overused corporate (LAUGHTER) few match the immortal words of Walter Gretzky as passed on to the world through his son Wayne, "Skate to where the puck is going, not to where it has been. 80 congratulations to several of us for using the most overused corporate cliche. (UNKNOWN) 64 of 71 7/7/2017 11:22 AM I CQ.com - Senate Judiciaiy Subcommittee on Antitrust, Competition 0003 I must have realty missed something. FRANKEN: You did. You were listening to Barbara lVlikuiski talk about I doubt about hockey. I want to l'll tell you where the puck is going, it's going to wireless. Okay? So Mr. Stephenson, I want to talk briefly about data-free TV which allows customers to stream DirecTV without incurring any data charges. white paper on the topic suggests that this offering is not discriminatory against other programmers or over the top competitors because they can pay the exact same rate that DirecTV pays fo:r the privitege. However, as I understand it, the FCC (ph) has done the math and estimates that it would cost an unaffiliated mobile video service provider like Netflix or Huiu far more to participate in the program than the $35 a month that DirecTV currently charges. The FCC argues then that participation in the program would make it difficult, if not infeasible, for a DirecTV now-competitor to offer its customers a competitively priced service. So my question is, Mr. Stephenson, explain again how your company is not taking money out of the how this isn't anti-competitive, because you'd be taking money out of your right pocket and putting in the your left pocket if DirecTV is paying a lower price, and you're basically supplementing them. And as the FCC asks in its most recent letter to you, how exactly does DirecTV make payments to mobility for this service, and do the respective entities record such payments? STEPHENSON: - I don?t know what exactly the payment mechanism is across entities. FRANKEN: I think it would be good that you did know it. STEPHENSON: The results reflect well, I don't know if we actually do a wire transfer or if there's just a journal entry to record the transfer, but at the end of the day, the results of DirecTV do indeed reflect that cost that's paid to our mobility business. They do. And so when you look at the margins of DirecTV, they reflect that cost in it. And there is a cost incurred by deiivering mobility. It?s a variable cost business, to put another megabyte -- FRANKEN: But how do we know that you can't be favoring something that you own, DirecTV, 65 of 71 7/7/201711:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition 0003 as opposed to some entity that would like to have their data delivered free to the consumer? STEPHENSON: We are charging everybody the exact same. The lowest wholesale price for data transport that we have. Everybody gets the same. Big companies, small companies. Companies are buying FRANKEN: I'm not sure about that assurance. How do we know that? STEPHENSON: We can provide the data. The Justice Department can look at this and get themselves comfortable with the data. It's just a data question, right? And we can make the data available. That's not a difficult thing to do. Is that what FRANKEN: It sounds difficult to me because we don't know how much -- how do you compute that? I mean, this is basic STEPHENSON: How do we compute what? FRANKEN: Yes, well this is basically unlimited data to -- for your user to DirecTV, so -- in other words, if some other provider is parallel to DirecTV wanted to get free data or wanted that service on on, delivered by to stream them, how do we know that you?re not giving DirecTV a deal? Because you own it. STEPHENSON: 7 This is a mechanism that's been used in our industry for decades, and there is a pricing mechanism. Same terms and conditions. We will not discriminate against others who want to provide the same service. So it's been going on for decades. FRANKEN: OK. Mr. Kimmelman, could you speak to Mr. Stephenson's characterization of track record on complying with commitments as spotless? KIMMELMAN: Senatorthink it's a great company and I think they are a very 66 of 71 7/7/2017 1] :22 AM CQ.com Senate Judiciauy Subcommittee on Antitrust, Competition aggressive competitor. Sometimes aggressive competitors can step over the line. There have been varieties of complaints at different points in time. I don't think it's worth going into it in great detail. -- i mean, these will be reviewed by the agencies. They're a wonderful company, but everybody who is competing hard sometimes competes a little too hard. And that's nothing new in the marketplace. The issue (CROSSTALK) FRANKEN: Well, a year ago, was slapped with a $25 million fine f0:r failing to protect its subscribers' personal information. Mr. Stephenson about a year ago he and I discussed how his company lobbied to prevent municipalities from building their own broadband networks to meet their communities? needs. This is using your competitive advantage. And I'd love to see that data. And I think that, by the way, I would like to see the FCC involved in this. When Bloomberg in the Bloomberg dispute, wasn't that that was the FCC dealing with that. That was not -- you said the DOJ has all these resources. That was the FCC dealing with Bloomberg, right? KIMM ELMAN: That?s correct, Senator. FRAN KEN: Yeah. STEPHENSON But the consent decrees in these things are with the Department of Justice. KIMMELMAN: Well, in a number of these cases, Senator, there have been paraliel commitments at the FCC with an understanding the FCC would do the enforcement because they are the regulator of the industry with the expertise. So, Iwill say there were, for example, on access to programming and Comcast-NBCU, there were restrictions put in place. The Department of Justice decided not to impose those because the FCC was putting those in place. There were parallels for trying to block online innovation in video, and the Department of Justice consent decree said they would defer to the FCC for enforcement action in most or nearly all instances. So, each one of those, at least, involved dual agency action with a reliance on the 67 of 71 7/7/201711122 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition FCC for the -- for the deep industry expertise. They also Hi just mention one thing. Mr. Chairman, you had raised the section 5 issue. ljust want to point out that we believe the court decision was horrible and it needs to be appealed. But there is a gap here that I think Mr. Stephenson missed, which is that if they purchase Time Warner and they have content, the FCC can only regulate their common carriage business, regardless of how the court wanted to look at it. They are restricted by Congress to only looking at common carriage assets, which i do not believe these assets would be, and many of their other value-added services, or anything that's online service. So there is a gap there that I think is significant. STEPHENSON: I would not I'm not smart enough, knowledgeable enough of that particular area, particulariy as it relates to content, to refute that. just do think it points out, though that there is a need to get clarity around the regulations over these issues. Yes? FRANKEN: Are we going go to a third round? Or can I complete my questioning? LEE: If you?ve got another question, go ahead. FRANKEN: Sure. lVIr. Stephenson, I want to turn now to something you said at a Wall Street Journal Live event. You shrugged off the comparison of your deal to Comcast?NBC Universal, saying that one of the biggest regulatory concerns around that deal, net neutrality, has largely been resolved. Now, that event happened prior to November 8th. So I'm going to give you another chance to address the comparison. Mr, Stephenson, do you still think the concern over ensuring net neutrality has largely been resolve? And as an historic opponent of net neutrality, are you going to urge President-elect Trump to enforce the open internet order and ask Republicans in Congress to halt their plans for legislation repealing the order, in order to get the deal approved? 68 of71 CQ.com Senate Judicialy Subcommittee on Antitrust, Competition I STEPHENSON: l'd like, first, to suggest am not a strong proponent of net -- opponent of net neutrality. We have I have 2010, been an advocate of the net neutrality principles -- no blocking, no discrimination, no paid prioritization. We helped craft those rules; worked with Senator (sic) Waxman to help craft the rules that we hoped would become law. We actually FRANKEN: Wait, wait. Didn't you go to court STEPHENSON: just we went to court against Title categorization of our services. That is not synonymous with net neutrality. Net neutrality has historic -- net neutrality has historically been defined by this body in the Senate, and historically at the FCC as no blocking, no discrimination, no paid prioritization. The FCC chose to take a much broader approach and put all wireless and broadband services under Title II regulations, a 1939- based regulation, for these services that are moving and transitioning fast. I do FRAN KEN: You went to court before they did that. You went to court, which basically forced them to do that. STEPHENSON: No, sir, we did not. No, we did not. The 2010 rules that were imposed, Verizon opposed those in court. We did not. FRANKEN: OK. STEPHENSON: We supported them and we helped craft them. OK. Then I stand corrected, i guess. It's not the first time. (LAUGHTER) So thank you. 69 01?71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition ljust wanted to -- I guess I'm done. I would like to see the FCC, by the way, have jurisdiction here. Mr. Kimmelman, would you? KIMMELMAN: Yes, Senator Franken. I mean, again, I think that there is a legitimate role. There's a question of exactly how that jurisdiction is divided and what assets are involved in the transaction that's for the companies and the FCC to work out. But at least as compared to previous transactions that are similar, I think it would be beneficial to the public policy process. FRANKEN: But Mr. Stephenson and Mr. Bewkes, you have not committed to submitted your deal for review by the FCC. That's correct? STEPHENSON: We're working through that process right now, Senator. The trigger for FCC review 1 is whether we assume any licenses from Time Warner. We're going through they own access to over 100 licenses. We're going through license by license discerning which license do we need to actually transfer. So until we get through that review, we can't state whether there will be an application with the FCC or not. Now, I would suggest to you that the DOJ, as Mr. Kimmelman has pointed out, looks these matters for expertise. have'no doubt the DOJ Will continue to work with the FCC as they go through this review. We will also keep the FCC posted on our'process, whether we do a formal filing or not. FRANKEN: Well, it's just that there's a different level that you have to meet, whether it's FCC or DOJ. And FCC, their merger review requires that any proposed deal actually benefits consumers. So, I I would think that the message you're sending to us and the current and potential consumers, if you can't confidently assert that this deal benefits the American public, there's not a great message. Mr. Kimmelman, do you think the FCC should review this deal? KIMMELMAN: Yes, Senator Franken. If it's within theirjurisdiction at all, then I believe they should. I think it would add a benefit to the overall public policy analysis. FRANKEN: 7O of71 7/7/2017 11:22 AM CQ.com - Senate Judiciary Subcommittee on Antitrust, Competition OK. Thank you. LEE: I want to thank all of you for coming and participating today, for answering our questions and providing your testimony. We have received a statement from Mr. Patrick that will be admitted into the record. The record will remain open for a week for additional questions and submissions. This hearing wilt be adjourned. CQ Transcriptions, Dec. 7, 2016 List of Panet Members and Witnesses PANEL MEMBERS: SEN. MIKE LEE, CHAIRMAN SEN. CHARLES E. GRASSLEY, SEN. ORRIN GHATCH, R-UTAH SEN. DAVID PERDUE, R-GA. SEN. THOM TILLIS, SEN. AMY KLOBUCHAR, D-MINN. RANKING MEMBER SEN. AL FRANKEN, D-MINN. SEN. RICHARD BLUEVEENTHAL, SEN. CHRIS COONS, SEN. PATRICK J. LEAHY, EX OFFICIO WITNESSES: RANDALL STEPHENSON, CEO, JEFFREY BEWKES, CEO, TIME WARNER MARK CUBAN, CHAIRMAN, AXS TV, OWNER, DALLAS MAVERICKS, LANDMARK THEATRES, AND MAGNOLIA PICTURES GENE KIIVIMELMAN, PRESIDENT AND CEO, PUBLIC KNOWLEDGE DAPHNA ZIMAN, PRESIDENT, CINEMOI Source: 00 Transcripts 71 of71 7/7/2017 11:22 AM Foster, Wayne From: Gilhool, Bridget Sent: Friday, July 7, 2017 1:45 PM To: Scheele, Scott; Frankel, Lawrence; Hughes, Jared Brink, Patricia Subject: Capitol Forum FW: Tech Weekly: White House Reportedly Considers Utilizing Merger Review Good afternoon Regards, Bridget From: The Capitol Forum Sent: Friday, July 7, 2017 1:01 PM To: Gilhool, Bridget Subject: Tech Weekly: White House Reportedly Considers Utilizing Merger Antitrust Authorities Take Lead; Germany Updates on Facebook investigation; Uber Hits EU Wall Web Version Update preferences Unsubscribe Teoh Weekly: White House Reportedly Considers Utilizing Merger Review; international Antitrust Authorities Take Lead; Germany Updates on Faoebook Investigation; Uber Hits EU Wall Vol. 5 No. 219? July 2017 Click here to access our library. Gooqie Shopping Case Conference Call On June 28, The Capitol Forum sat down with Professor Alan Riley to discuss the prohibition decision in the Google Shopping antitrust case. One highlight to note is that Professor Riley said that the Google Shopping decision "shows that the Commission is unafraid to bring these cases.? ?It sends a signal that Brussels is interested in going after the platform monopolies. And again? what you hear on the street in Brussels is that there is an interest, an appetite was the word that was used to me, for the Commission to ?nd the right case or the right set?of evidence to bring, deploy a case against Facebooki And that?s the potential next target in line. And, of course, the Bundeskarteliamt Federal Competition Authority is already investigating Facebook. And the Commission is looking at Facebook and looking at business practices, I suspect there have been at least a Couple of complaints on Facebook's practices? said Riley. This Week in Tech News Trump administration reportedly considers leveraging merger review to hit CNN. A New York Times profiie of CNN President Jeff Zucker published Wednesday has a considerable 1 nugget regarding the media company?s parent, Time Warner. President Trump?s team has reportedly considered using the Justice Department's review of the ATT-TW merger in its ongoing confiict with the media company. ?White House advisers have discussed a potential point of leverage over their adversary, a senior administration official said: a pending merger between parent company, Time Warner, and IVir. Trump?s Justice Department will decide whether to approve the merger, and while say there is little to stop the deal from moving forward, the president?s animus toward CNN remains a wild card,? the NYT article reads. Besides the implications for the ATT-TW deal, stakeholders coutd consider this as proof positive that then~candidate Trump was not biuffing when he invoked competition law as a political tool. Trump previously indicated Amazon could be targeted with antitrust actions due to Jeff Bezos' ownership of the Washington Post, and he recently began that feud anew with a fresh -- albeit muddled tweet. Facebook and Google also faced the ire of the President preselection in ?fake news?~type tweets. Amazonconsiders teaming with Dish Network in tetecom. The Wall Street Journal reports that Amazon and Dish-Network heads Jeff Bezos and Charlie Ergen, respectively, have been in conversations about ways the two companies could partner in teiecom, according to WSJ sources familiar with the conversations. ?Among the ideas: Amazon could help finance a network Dish is building focused on the ?internet of Things? the idea that everything from bikes to Amazon?s drones can have web connectivity everywhere. Another idea is that Amazon, as a founding partner of Dish?s new wireiess network, could offer an option for Prime members to pay a iittle more a month for a connectivity or phone plan, one of the people said," reads the article. The article further states that ?an all-out acquisition of Dish by Amazon is highly unlikeiy.? Any partnership would represent yet another vertical the retaii giant enters. The company has recently focuSed on through its Echo devices and tried unsuccessfully to push a set of Fire phones, though telecom service would has different beast. Google EU decision gives rise to further international scrutiny. Following the company?s $2.7 billion fine at the hands of the EC, the knives are out for Google as some politicians abroad call for action. A domino effect that sees other countries emulate the European approach could see the tech giant facing similar cases. in South Korea, the leader of the FairTrade Commission, Kim Sang-lo, has recently spoken critically of the tech giant, according to the Korea JoonAng Daily. ?In an interview with the [Korea Joan/ting Dal/y], Kim said he wlii monitor globai IT firms to find out if there are any violations in collecting big data. Kim added that he will look into whether such firms hamper small companies entering the market," reads the article. It is notable that despite Google's low market share in South Korea, policymakers are still calling for action. Meanwhile, in March, Turkey opened an antitrust investigation on the Android operating system. We have previously reported how the international community could look toward the EU for guidance on competition policy in the tech space if the US. continues to cede ground as a leader. It would not be surprising if Turkey, or cases from other countries, how close to the forthcoming Android decision. Germany competition authority issues update on Facebook investigation. Germany?s competition authority, the Bundeskarteilamt, commented on its ongoing investigation of Facebook in its annual report last week. ?Here we are faced with two key tasks. we have to keep markets open to stop the internet giants from making it impossible for newcomers to enter the market and to give competitors a chance. Secondly, we have to protect consumers from the abuse of market power,? read a statement from Andreas Mundt, head of the Bundeskarteilamt. The German authority had previously said in the press release announcing the investigation that it Is determining whether the platform's terms and conditions? represent an abusive imposition of unfair conditions on users Bloomberg reported that lVlundt said he is ?eager? to presentfindings this year. Uber hits wail in EU. Matching Ubers social and legal domestic troubles are its regulatory hurdles abroad. The NYT reported Tuesday that a senior adviser for the Court of Justice of the European Union recommended that the EU treat the company as a traditionai taxi service, including the stringent regulations those businesses face. The recommendation is nonbinding, and Uber said in a statement that it will ?await the final ruling later this year,? though the NYT reported that adviser recommendations are generally followed. ?The'latest recommendation came less than two months after [the adviser] delivered a similar opinion to the court, arguing that Uber should have to comply with rules governing transportation companies. A final ruling in that case is expected by late summer, and a decision related to Tuesday?s case is due by the end of the year," reads the article. Uber has mostly sidestepped federal regulatory and enforcement actions in the US that would threaten its core business, though it has come under broad scrutiny for its platfornncontractor employment structure and strategies to avoid existing regulations. That impunity could be coming to an end, as Re/code has reported the DOJ is investigating Greyball whiie the FTC has opened its own inquiry on some of the data?handling mishaps that have plagued the company in recent years." Zuckerberg supports Universal Basic Income continues not running for president. Mark Zuckerberg took to his profile Tuesday to discuss a political initiative he values. Zuckerberg described how Alaska .. a state with a little over one person per square mile makes use of its replete natural resources to provide a form of ?This is a novel approach to basic income in a few ways. First, it?s funded by natural resources rather than raising taxes. Second, it comes from conservative principles of smaller government, rather than progressive principles of a larger safety net. This shows basic income is a bipartisan idea,? Zuckerberg writes. ?When you?re losing money, your mentality is largely about survival. But when you?re profitable, you?re confident about your future and you look for opportunities to invest and grow further,? he continues. ?Alaska?s economy has historically created this winning mentality, which has led to this basic income. That may be a lesson for the rest of the country as well.? Zuckerberg has previously espoused the idea of though he has denied that his 50~state trip is a way to gear up for a presidential run. in that case, perhaps could be considered the first plank in his ?how to be a popular lnternet guy and not a politician? platform. Quick Bytes a You should be outraged at Gooqle?s anti-competitive behavior [Washington Post] 3 0 Even as they criticize Trump?s aqenda? tech execs like Eric Schmidt and Elon Musk are backinq Republican campaiqns [Re/code] as Apple News May Let Publishers Sell Ads Their Own Wav [AdAge] a? Alphabet, Amazon Dominance Mav Prompt Re?Write of Monopoly Rules, Opinee MKM [Barron's] iPhone Buds Are Too Valuable to Report to Apple [Motherboard] Amazon?s Alexa passes 15,000 skills. up from 10,000 in February [TeohCrunoh] a? Media buvere warn Facebook viewability ?diabolical and horrible? [Ad News] News Feed FYI: Showino More Informative Links in News Feed [Faoebook Adam Mosseri] on Auto Companies hurtinq from latest rival Amazon [New York Post] . @00qu funds automated news protect News] From: Casey, Maureen To: Attorneys Subject: FW: Klobuchar queries US attorney general about White House interference in Time Warner antitrust review- MLex Of?cial Statement Date: Friday, July 7, 2017 2:18:35 PM Hi Ali, I iVl a read From: i\/lLex Editorial [maiEtozpress@mlex.com] Sent: Friday, July 7, 2017 1:56 PM To: Casey, Maureen Subject: Klob?uchar queries US attorney general about White House interference in Warner antitrust review Mtex Official Statement Klobuchar queries US attornev General about White House interference in Time Warner antitrust review in? i ng'r MLex Summary. US Senator Amy Klobuchar sent a letter to Attorney General Jeff Sessions on Friday asking if the White House has contacted the US Department ofjustice regarding the Time Warner deal and if he would notify Senate Judiciary Committee leaders should such contacts occur. The Minnesota Democrat's letter references a The New York Times report that said White House advisers discussed the pending Warner merger as a point of leverage against Time Warner?owned CNN, which President Donald Trump has criticized for its news coverage. "This report is deeply troubling. I hope you agree that the President or his advisers' concerns about the content of CNN's press coverage have no place in antitrust enforcement," wrote Klobuchar, the ranking member on the Judiciary antitrust subcommittee. Read more a? I i .. a cart I I I, 2017 MLex Global Antitrust All rights reserved. From: Roy? Deborah To: Huqhes, Jared A.: Chu. Alvin Subject: FW: And Time Warner: Another Merger Update Date: Monday, July 10, 2017 3:36:55 PM Let me know if you can?t open this attachment. Debbie From: account@seekinealoha.com on behalf of Seeking Alpha Sent: Monday, July 10, 2017 2:30 PM To: ciaodeb@hotmail.eom Subject: TWX: And Time Warner: Another Merger Update And Time Warner: Another Merger Update 721.341} rim, Moenot l'13nw1ei til 'iil'iir?i ll; elirme atg?aiteiss to your Aloha ibis: emeii semi to Ciaodeb??hotmailcom by fieekihg Alpha Seeking Aiol?ia, Vanderbilt Avemie, 133%: ?oor: New "mrk, NY 10017 Uodate vour email orelerences Ungubscribe from TWX i Unsubscribe from all emails From: Car on lan ATR To: Subject: NYT on the "small army" "doggedly investigating" Date: Monday, luly 10, 2017 5:26:11 PM 7/ attwtimewvarnerumerger.lit-ml Technolog Blockbuster Deal for Time Warner Hangs in Limbo By QECILIA KANQ and de la JULY 9, 2017 WASHINGTON At the Department of Justice, staff members in the antitrust of?ce have been doggedly investigating blockbuster $85.4 billion bid for Time Warner. They have deposed the executives of both companies; questioned several media, telecommunications and technology rivals; and demanded thousands of pages of con?dential documents from scores of businesses to discern if the deal would violate competition laws and thus if it should go ahead at all. But eight months into the review, the small army of career antitrust of?cials is marching toward a great unknown. Dylan Carson US DOJ ATR TEL Section Of?ce: 202 598-8799 Mobile: dylancarson 1 us .ol.gov From: Kiser Melanie To: Carson, Dylan (ATR): Subject: RE: NYT on the ?small army" "doggedly investigating" Date: Monday, July 10, 2017 5:44:36 PM From: Carson, Dylan (ATR) Sent: Monday, July 10, 2017 5:26 PM To: Subject: NYT on the "small army? ?doggedly Investigating" 1 7/0 7/ OQ/teclmolo gy/ att?t.ime?wam erwm eraenhtm Technology Blockbuster Deal for Time Warner Hangs in Limbo By CECILIA KANG and MICHAEL J. de la MERCED JULY 9, 2017 WASHINGTON At the Department of Justice, staff members in the antitrust of?ce have been doggedly investigating blockbuster $85.4 billion hid rm ".1?7lme Warner. They have deposed the executives of both companies; questioned several media, telecommunications and technology rivals; and demanded thousands of pages of con?dential documents from scores of businesses to discern if the deal would violate competition laws and thus if it should go ahead at all. But eight months into the review, the small army of career antitrust of?cials is marching toward a great unknown. Dylan Carson US DOJ ATR TEL Section Of?ce: (202) 598?8799 Mobile: dylan.earson@usdoj.gov From: Young. Frederick To: Kiser Melanie; Carson. Dvlan Subject: RE: NW on the "small army? "doggedly Envestigating" Date: Monday, July 10, 2017 5:45:40 PM From: Klser, Melanie Sent: Monday, July 10, 2017 5:45 PM To: Carson, Dylan (ATR) Subject: RE: NYT on the ?small army" ?doggedly investigating" From: Carson, Dylan (ATR) Sent: Monday, July 10, 2017 5:26 PM To: Subject: NYT on the "small army" "doggedly investigating? 7/ 07/ 09/ tech noloay/ att~tlme~warner~m eruenhtm l?eehnoiog Blockbuster Deal fer Time Warner Hangs in Limbo By CECILIA KANG and MICHAEL J. de la MERCED JULY 9, 2017 WASHINGTON At the Department of Justice, staff members in the antitrust of?ce have They have deposed the executives of both companies; questioned several media, telecommunications and technology rivals; and demanded thousands of pages of con?dential documents from scores of businesses to discern if the deal would violate competition laws and thus if it should go ahead at all. But eight months into the review, the small army of career antitrust of?cials is marching toward a great unknown. Dylan Carson US DOJ ATR TEL Section Of?ce: 202 598-8799 Mobile: Ian. From: Martin? John (ATR) To: Tobev. Mark Subject: July 11 2017 News Clips Date: Tuesday, July 11, 2017 3:33:43 PM Attachments: July 11 2017 News Team, Attached are news Clips from this past week. Best John Warner News Clips 7/11/17 Contents Senator Raises Concerns of White House ?Political Influence? Over Warner Merger2 Blockbuster Deal for Time Warner Hangs in Limbo 4 Warner Bros Digital Network Names 3 SVPs. 7 Disney, Fox and Viacom Among Media Stocks Pounded by Cord?Cutting 8 Sinclair begins to make the case for $3.9 billion Tribune deal 10 HBO and Cinemax Now Available On Hulu 12 Senator Raises Concerns of White House ?Political In?uence? Over AT &T-Time Warner Merger Variety, 07/0 7/201 7? After reporte that the Trump administration may nee government eporovel ot merger with Time Warner ee ?leverage? otter CNN, key Demoeretie eenetor ie eslring Attorney General Jeff Sessions for dieoleeure of eny oonteote between the White Houee end the Justice Department about the trenseetion. Sen. Amy Klobuchar (Wt/tinny tanking member of the Senate Judieiery?e ettbeornrnittee, wrete in the letter thet ?ehy oolitioel interferenee in enforcement ie uneoeentehte.? ?Even more eeneerning, in thie inetenoe, te thet it enpeers thet eome eevieere tn the President may believe thet it ie eperenriete tor the government to nee ite law enforcement authority to eiter or eeneor the press. Such an eotion would vieiete the hiret Amendment,? ehe wrete. On Wenneedey, the New Yerk ?l?irnee, eiting an unnamed eenier eominietretien ottieiet, eeid that the merger wee ?pntentiel pnint of leverage? in CNN. The Deity Getter renerten thet the edminietretion ie conditioning ite enneort of the rteei on Whether CNN chief Jett Zuoiter te tired or toroen to reeign, Kiobooher eekee tor eonteete between the White Houee end the Juetioe Seperti?nent on the merger. Trump hee repeatedly etteeked the network ee ?take newe," end even tweeted out a video in which he?s shown wrestlinq a man, with the CNN loge superimposed over his heed, to the grennd, The videe hed been altered trern ene tehen et a Wreetleiiflenie event about 10 yeere ego. The Jeetiee {Department is reviewing the $85 billion Werner but he Antitruet Divieton weighe whether conferrn te entitruet law, not over whet ite tinneet would he on the nature end tone of newe coverage, Meken Detrehirn, Trump'e choice to teed the entitruet divieien, ie etill eweiting Senate confirmation, bet during hie eentirrnetion hearing, he eeid thet he Wooid rneintein the indenendenee ot the divieion. hiohueher noted thet ehe hee reieect ?eerioue queetione ehont the impeet? of the merger, tint wrote thet the ?treneeotion ehonld be judged eolely on tte impeet en oomeetitton, innovation, end eonenntere, not are ?leverege? tor politieel gein.? Still, the idea that the White Houee weeld try to exert its ihtiuehce everthe review, for peliticei rather then eetitruet eencerne, has been to eorhe ehtitreet experts. Derihg the eempeigh. Trump eeid thet he eppheed the Warner merger. citing the eeheehtretieh of the media. He has said iittie pubiicty about the eehdihg treheectihh e?hce thee. Eh December, CEO Reheat! Stephehem wee eeked about Trump?s epeoe?tieh tea the ehd even then suggested thet Trumh?e with CNN was teeter. ?Ahytime the president at the United States; cemee eut ehe? they?re not in fever of whet you?re trying to do, you have to pay attention,? he eeid at media eertterence. ?But i den?: knew whet pert etthe deei he?e reterrieg to. We heard rumors he?s: het happy with CNN, :90 thet might heve ceme into it.? Stepheheeh met with ?trump tr: Jehuery, bet the campehy eeid that the merger was hot 1202489518/ Blockbuster Deal for Time Warner Hangs in Limbo New York Times, 07/09/2017 At the Department of Justice, staff members in the antitrust of?ce have been doggedly investigating blockbuster $85.4 billion bid for Time Warner. They have deposed the executives of both companies; questioned several media, telecommunications and technology rivals; and demanded thousands of pages of con?dential documents from scores of businesses to discern if the deal would violate competition laws w? and thus if it should go ahead at all. But eight months into the review, the small army of career antitrust of?cials is marching toward a great unknown. For one thing, the Justice Department of?cials still don?t have a boss who will have the ?nal say on whether to approve or block the deal. President Trump?s pick for assistant attorney general in charge of antitrust matters, Makan Deirahim, has been held up in a logjam of nominees in the Senate. And Mr. Trump himself, who said during last year?s campaign that he opposed the deal, is another wild card. A senior administration of?cial said last week that members of the White House were discussing how they might use their perch over the merger review as leverage oVer Time Warner?s news network, CNN. All of that has effectively put into limbo the most signi?cant business deal before the Trump administration, a benchmark for business transactions going forward. In turn, that has cast a cloud over the business world, which is watching the regulatory process with 'intense interest. ?We?ll obviously take a hard look at that,? Charles W. Ergen, the chief executive of Dish Network, said in a call with in November, referring to bid for Time Warner. ?It?s going to be a big deal. We?re certainly going to have some concerns.? Mr. Ergen said that purchase of Time Warner would spur other cable and satellite companies to seek deals with wireless companies and content ?rms. ?People on the sidelines have to do something different,? he said. ?You can remain on the sidelines, but that might be malpractice.? The deal is still expected to be approved because and Time Warner don?t directly compete. But unlike past megamergers such as Comcast?s purchase of NBCUniversal in 2013, this one is potentially trickier from an antitrust perspective. That?s because has a nationwide footprint with its wireless and DirecTV satellite service, and could use that reach to demand higher fees from media companies and other cable and satellite firms. ?The business community is watching intenselyto see what an antitrust D.O.J. will look like in the Trump administration and how much of the rhetoric from the campaign trickles down into policy,? said Vivek Stalam, an analyst at New Street Research. ?People are looking at Time Warner as the ?rst indicator of what that will be like.? As the review process drags on, business leaders are not sitting on their hands, with many continuing to carry out their strategic plans. In May, Lowell McAdam, chief executive of Verizon, which has already snapped up AOL and Yahoo to expand its digital media offerings, said at an industry conference that the telecom company was keeping its eyes and ears open for deal making. ?We have always been a company that prefers to do organic growth,? he said. ?But if there was an opportunity to accelerate the strategy, we would look at that. And people should be ?red if they don?t look at those sorts of things.? Still, the bumpy regulatory process adds uncertainty. While the and Time Warner regulatory review is not taking longer than those of other megadeals, the delay in bringing in a permanent assistant attorney general has put the process into a holding pattern. And in the vacuum of leadership, more obstacles have emerged for the deal. Some employees of media and telecom companies were recently deposed as a part of an investigation by a coalition of about 20 state attorneys general into purchase of Time Warner, according to two people with knowledge of the depositions, who asked not to be named because they were not authorized to speak publicly. The attorneys general asked whether would charge competitors like Dish higher fees for Time Warner content such as HBO shows and NBA. basketball games on TNT, and whether such price increases could lead to higher television costs for rural customers who rely on satellite services, said the people with knowledge of the investigations. The attorneys general are sharing information with of?cials at the Justice Department. Justice Department of?cials and the state attorneys general are also exploring whether?other content companies such as Starz and Showtime premium channels offered at an extra cost like Time Warner?s HBO could have a harder time reaching customers, according to ?ve people with knowledge of the investigations. Those companies are concerned that could promote only HBO to customers, they said. could also offer free and unlimited viewing of HBO for its wireless customers while the streaming of competing premium channels would count against data limits. Some lawmakers have become more vocal about their concerns. Several Democratic senators recently wrote to Attorney General Jeff Sessions that the deal should be blocked if there was evidence of consumer harm. And Senator Susan Collins, a Republican from Maine, wrote a letter last month to the Justice Department?s acting head of antitrust, asking for stronger scrutiny of the deal so that consumer choices would not be reduced. On Friday, Senator Amy Klobuchar, Democrat of Minnesota, also expressed alarm at reports that the White House might be trying to in?uence the Justice Department?s merger review because of Mr. Trump?s rocky relationship with CNN. ?Any political interference in antitrust enforcement is unacceptable,? Ms. Klobuchar wrote to Mr. Sessions. ?Even more concerning, in this instance, is that it appears that some advisers to the president may believe that it is appropriate for the government to use its law enforcement authority to alter or censor the press.? The Justice Department declined to comment. has said it still expects the merger review to be completed by the end of the year. Last month, chief executive, Randall Stephenson, attended a White House tech event, the latest of several meetings he has had with other executives and White House of?cials since the election. Since the Time Warner bid was announced, has spent $8.2 million on lobbying. It had 27 outside lobbying firms and was ranked eighth in total lobbying spending. has said that it has no incentive to withhold Time Warner shows from competitors and that the review appears to be moving smoothly. ?Over the past eight months, we have provided information to any regulator that has requested it, and we have appreciated the chance to answer their questions,? said Fletcher Cook, a spokesman for Rival companies may push for the Justice Department to demand tough conditions for merger approval but not to reject the deal outright. Inspiring government regulators to crack down on an acquisition would endanger their own consolidation efforts. Even so, the uncertainty is set to continue. When the Senate comes back into session on Monday, Mr. Delrahim, Mr. Trump?s nominee, will have three weeks to get confirmed before the full August recess. But it is unclear whether he will move past the logjam, and a delay in his appointment could signi?cantly set back and Time Warner?s review. Antitrust experts are doubtful the companies and the Justice Department would want to rush through the investigation until Mr. Delrahim is in place. m/ 20 i 7/ 07/ 09/technolo gv/ Warner Bros Digital Network Names 3 SVPs The Wrap, 07/10/20] 7 Three key hires have come on board to run Warner Brothers Digital Network, a division that manages both distribution and content for the label in the digital space. Former Spotify acquisitions head Eric Besner was named senior vice president in business development. Native son Greg Salter will serve as senior vice president in business and strategic planning, moving over from the same department at WB corporate. Katie Soo, formerly of Media and Hulu, has been named senior vice president of marketing. All three will report to Warner Bros. Digital Networks Executive Vice President Jay Levine. ?They each bring broad experience and a digital-native perspective to their respective areas of expertise and will be key in helping us ramp up our operations as we continue to grow both our digital short?form production and OTT offerings,? Levine said in a statement. Before Spotify, Besner was a ?agship member of the Net?ix Originals team, overseeing that launch as VP of original programming. He?s also worked with Lucas?lm. 800 will increase brand awareness and direct consumer relationships. At Hulu, she served as Head of Social across brand, originals, content and product. She?s also an early alum of Dollar Shave Club, the viral sensation that sold in 2016 for a reported billion dollars. At corporate, Salter oversaw mergers and acquisitions and strategic investment. He?ll provide a similar function at the digital network, reporting to WB Chief Digital Of?cer and EVP Thomas Gewecke. ?To me, this is the most exciting part of the business and the fastest growth area,? Salter told TheWrap. ?If you look at consumer behavior and its evolution to platforms and formats, we have a huge opportunity to tap into that.? Salter said the team will focus on ?how to reimagine the studio in the digital era, and that includes skillsets and abilities to get closer to our consumer.? Warner Bros. Digital Networks consists of the studio?s digital and OTT video services, producing native content and tasked with growing direct-to?consumer business. They work with with sister divisions Turner and HBO, and have a portfolio that includes Boomerang (a partnership with Turner, Machinima, Uninterrupted (a partnership with LeBron James and Maverick Carter), Ellen Digital Ventures (a partnership with Ellen DeGeneres), a DC Entertainment-branded service debuting in 2018 and more to be announced. besner/ Disney, Fox and Viacom Among Media Stocks Founded by Cord-Cutting The Street, 07/11/2017 The second quarter wasn't kind to media stocks. And that has gone for July thus far as well. While media companies that own cable TV and broadcast networks differ in small and Iargeways, few. have been immune to concerns about cord?cutting. And the second quarter appears to have been the worst quarter on record for declines in subscriptions to traditional video. Not only are more people dropping their cable TV or satellite TV service, the number of new subscribers is failing to offset the declines. According to Wells Fargo Securities LLC, pay?TV providers led by Charter Communications Inc. (M) Comcast Corp. (CMCSA) and Dish Network Corp. lost a net total of 1.28 million subscribers in the second quarter. That's an increase over the first quarter, when the net subscriber decline totaled 748,000. Wells Fargo media analyst Marci Ryvicker's tabulation is just a tad higher than a second-quarter analysis two weeks ago from UBS, which put the industry loss for the quarter at 1.2 million subscribers. Given the acceleration in cord-cutting, media stocks have been falling. Since March 31, Walt Disney Co. (gs) has dropped Twenty?First Century Fox Inc. (M) has lost 13.1%, Discovery Communications Inc. (M) is down Scripps Networks Interactive Inc. has declined 14.3% and Viacom Inc. (W) has tumbled 26.4%. To be sure, the advent of new online pay-TV services is cushioning the decline. Second?quarter net subscriber declines totaled 858,000 subscribers when new services such as lnc.'s (I) DirecTV Now are included in the tabulation. Yet it's important to realize that those services aren't necessarily generating the same revenue for network owners or pay?TV operators as traditional cable and satellite TV. From all indications, a multichannel service priced at roughly $40 per month may not even be profitable. More concerning, the accelerating pace of subscriber declines in the second quarter came as stepped up promotions for DirecTV Now and its DirecTV satellite service, Alphabet lnc. (GOOGL) launched YouTube TV and Hulu LLC, jointly owned by Disney, Fox, Comcast and Time Warner Inc. (TWX) began selling subscriptions to its-multichannel online service. Despite the best efforts of a formidable industry, the pay?TV universe continues to shrink. The second?quarter decline equates to a 2.5% annual drop in traditional subscribers and puts the industry on pace to lose 3.4% of its base in 2017 after enduring a 1.5% decline in 2016. For the immediate future, cord-cutting shows no signs of slowing. Sinclair begins to make the case for $3.9 billion Tribune deal Chicago Business Journal, 07/10/2017 Sinclair Broadcast Group Inc. disclosed that its $3.9 billion acquisition of mm Media Co. will cause it to exceed the national television ownership limit while also arguing the deal. is in the public's interest. The Hunt Valley television broadcaster will exceed the ownership cap by 6.5 percent, according to applications filed June 26 with the Federal Communications Commission. Currently, broadcasters are capped at 39 percent ownership nationwide. There are 10 markets where Sinclair and Tribune own stations and because of FCC rules Sinclair would not be able to own both. The deal could result in spinoffs if Sinclair has to divest some of its stations. According to the filing, "the applicants intend to take actions in such markets as necessary to comply with the terms of the merger agreement and the commission?s local television ownership rules as required in order to obtain FCC approval of the transaction." The markets where Sinclair (NASDAQ: SBGI) would not be allowed to acquire stations include: Seattle-?Tacoma, Washington St. Louis, Missouri Portland, Oregon Salt Lake City, Utah Oklahoma City, Oklahoma Greensboro?High Point?Winston Salem, North Carolina Grand Rapids?Kalamazoo-Battle Creek, Michigan Richmond?Petersburg, Virginia Des Moines-Ames, Iowa Indianapolis, Indiana 0 0 Through the acquisition of Chicago?based Tribune (NYSE: TRCO), Sinclair expected t_o add 42 stations in 33 markets, giving the broadcaster a total of 233 stations across 108 markets nationwide and reach into 72 percent of the US. The deal has come under scrutiny with critics accusing Sinclair of being right wing? leaning and saying the deal will continue a trend of consolidation in a media industry that needs more independence. 10 The New York Times in May published a story accusing Sinclair of sending "must?run" segments to its stations to push a conservative agenda. The issue was highlighted again by comedian John Oliver during the most recent episode of his HBO show "Last Week Tonight John Oliver." Now, the public may send written comments to the FCC if they oppose the deal. Opponents have until Aug. 7 to file "petitions to deny." Sinclair and Tribune will then have until Aug. 22 to file oppositions to the petitions. Replies by both sides are due Aug. 29. The FCC's process requires Sinclair and Tribune to prove the deal is in the public's interest. For their part, the companies said in the FCC filing the deal "will increase the merged company?s capability to serve the public by increasing its operational efficiencies, allowing Sinclair to upgrade the stations? facilities, expand the stations? local coverage (including local news), offer even greater value to multi~channel video distributors, and increase syndicated and original programming offerings." Sinclair and Tribune said "ever?increasing operating expenses" and increased competition from other media, including cable and internet, for advertising revenue threatens "local television stations? ability to provide high?quality, free, public interest services to their communities." "The transaction will produce both operational ef?ciencies and economies of scale, as well as greater audience reach which will make Sinclair more attractive to programmers, including networks and syndicators, generating reven?es that can be reinvested in the broadcast operations in a manner that improves service to the public," the companies wrote in the FCC filing. Sinclair added that the deal will also help it roll out new television broadcast standards, known as ATSC 3.0 or Next?Generation TV. ournals.com/ chicago/news/ZO 1 7/ 07/ '1 9-bi] 11 HBO And Cinemax Now Available On Hulu CED, 07/0 7/20] 7 Hulu and HBO announced a partnership in which Hulu will add on?demand subscriptions and live TV viewer access. Effective on July 6, Hulu viewers can stream shows, movies, documentaries, sporting events, and more both live and on demand. Viewers can access the new Hulu setup by adding the premium channel to their service for a payment of $14.99. In addition to HBO, the deal also enables Hulu viewers to add Cinemax programs for $9.99 a month. Purchasing subscribers of the HBO add?on through Hulu will also gain access to HBO Now through their .Huiu account. The add-ens are available across Hulu?s subscription plans, whose timing comes ahead of summer premieres for shows like ?Game of Thrones,? ?The De?ant Ones,? and ?Ballers.? The Cinemax add?on offers access to hundreds of movies like ?Warcraft? and ?Deepwater Horizon,? along with programs like ?The Knick,? ?Outcast,? and ?Banshee.? Live channels like HBO 2, HBO Family, HBO Comedy, ActionMAX, ThrillerMAX, and MovieMAX (all in HD) will be available to viewers throughout July and August. Both HBO and Cinemax join Hulu?s offering of subscription plans, like it?s $7.99/1nonth Limited Commercials plan, $1 1.99/month No Commercials plan, and Hqu with Live TV (Beta). This feature includes both live and on demand programming from .more than 50 sports, news, entertainment and kid?s channels, along with Hulu?s premium streaming library for a premium of $39.99. HBO and Cinemax feeds on the eastern and western US. coasts will be available to viewers on supported devices. Hulu?s recently unveiled user experience is currently available on Apple TV (4?11 generation), Xbox One, and Android mobile devices. Addmons will reportedly be available on more devices as more new user experiences continue to roll out across more major platforms throughout the summer. 12 U.S. Department of Justice Office of Information Policy Suite 11050 1425 New York Avenue, NW Washington, DC 20530-0001 Telephone: (202) 514-3642 September 29, 2017 Mr. Austin Evers Executive Director American Oversight 1030 15th St., NW, Ste. B255 foia@americanoversight.org Re: DOJ-2017-006164 (ASG) VRB:CLM:SBT Dear Mr. Evers: While processing your Freedom of Information Act (FOIA) request dated July 7, 2017, for records related to the proposed merger of Time Warner and AT&T, the Antitrust Division of the Department of Justice referred one page of material to this Office for processing and direct response to you on behalf of the Office of the Associate Attorney General. For your information, this Office received the material on August 16, 2017. Upon review, I have determined that this material should be withheld in full pursuant to Exemption 5 of the FOIA, 5 U.S.C. § 552(b)(5), which pertains to certain inter- and intraagency communications protected by the deliberative process privilege. For your information, the withheld page relates to and includes draft language to respond to Questions for the Record. For your information, Congress excluded three discrete categories of law enforcement and national security records from the requirements of the FOIA. See 5 U.S.C. § 552(c) (2015) (amended 2016). This response is limited to those records that are subject to the requirements of the FOIA. This is a standard notification that is given to all our requesters and should not be taken as an indication that excluded records do, or do not, exist. You may contact our FOIA Public Liaison, Laurie Day, for any further assistance and to discuss any aspect of your request at: Office of Information Policy, United States Department of Justice, Suite 11050, 1425 New York Avenue, NW, Washington, DC 205300001; telephone at 202-514-3642; or facsimile at 202-514-1009. Additionally, you may contact the Office of Government Information Services (OGIS) at the National Archives and Records Administration to inquire about the FOIA mediation services they offer. The contact information for OGIS is as follows: Office of Government Information Services, National Archives and Records Administration, Room 2510, 8601 Adelphi Road, College Park, Maryland 20740-6001; e-mail at ogis@nara.gov; telephone at 202-741-5770; toll free at 1-877-684-6448; or facsimile at 202-741-5769. DOJ-17-0214-B-000001 -2If you are not satisfied with my response regarding the material referred to this Office by the Antitrust Division, you may administratively appeal by writing to the Director, Office of Information Policy, United States Department of Justice, Suite 11050, 1425 New York Avenue, NW, Washington, DC 20530-0001, or you may submit an appeal through OIP’s FOIAonline portal at https://foiaonline.regulations.gov/foia/action/public/home. Your appeal must be postmarked or electronically submitted within ninety days of the date of my response to your request. If you submit your appeal by mail, both the letter and the envelope should be clearly marked “Freedom of Information Act Appeal.” Sincerely, Carmen L. Mallon Chief of Staff DOJ-17-0214-B-000002 U.S. Department of Justice Office of Information Policy Sixth Floor 441 G Street, NW Washington, DC 20530-0001 Telephone: (202) 514-3642 April 6, 2021 Austin Evers American Oversight 1030 15th Street, NW Suite B255 Washington, DC 20005 Re: DOJ-2017-005132 foia@americanoversight.org DRH:SBT Dear Austin Evers: This responds to your Freedom of Information Act (FOIA) request dated and received in this Office on July 7, 2017, in which you requested records pertaining to the Time Warner￾AT&T merger, CNN’s coverage of the Trump administration, a July 5, 2017 New York Times article, and Jeff Zucker. Please be advised that this Office has previously processed records responsive to your request in response to a prior FOIA request. Records responsive to this prior request were disclosed with withholdings made pursuant to Exemptions 5 and 6 of the FOIA, 5 U.S.C. § 552(b)(5) and (b)(6). Exemption 5 pertains to certain inter- and intra-agency communications protected by the deliberative process privilege. Exemption 6 pertains to information the release of which would constitute a clearly unwarranted invasion of personal privacy. Additionally, please note that duplicative records and non-responsive records have not been processed and are marked accordingly. I trust that this material satisfies your request. For your information, Congress excluded three discrete categories of law enforcement and national security records from the requirements of the FOIA. See 5 U.S.C. § 552(c) (2018). This response is limited to those records that are subject to the requirements of the FOIA. This is a standard notification that is given to all our requesters and should not be taken as an indication that excluded records do, or do not, exist. You may contact our FOIA Public Liaison, Valeree Villanueva, for any further assistance and to discuss any aspect of your request at: Office of Information Policy, United States Department of Justice, Sixth Floor, 441 G Street, NW, Washington, DC 20530-0001; telephone at 202-514-3642. Additionally, you may contact the Office of Government Information Services (OGIS) at the National Archives and Records Administration to inquire about the FOIA mediation services they offer. The contact information for OGIS is as follows: Office of Government Information Services, National Archives and Records Administration, Room 2510, 8601 VERSIGHT -2- Adelphi Road, College Park, MD 20740-6001; e-mail at ogis@nara.gov; telephone at 202-741- 5770; toll free at 1-877-684-6448; or facsimile at 202-741-5769. If you are not satisfied with this Office’s determination in response to this request, you may administratively appeal by writing to the Director, Office of Information Policy, United States Department of Justice, Sixth Floor, 441 G Street, NW, Washington, DC 20530-0001, or you may submit an appeal through OIP’s FOIA STAR portal by creating an account following the instructions on OIP’s website: https://www.justice.gov/oip/submit-and-track-request-or￾appeal. Your appeal must be postmarked or electronically submitted within ninety days of the date of my response to your request. If you submit your appeal by mail, both the letter and the envelope should be clearly marked “Freedom of Information Act Appeal.” Sincerely, Douglas R. Hibbard Chief, Initial Request Staff Enclosures A IC A PVERSIGHT DOJ-17-0214-C-000001 Prior, Ian (OPA) From: Prior, Ian (OPA) Sent: To: Monday, November 20, 2017 4:35 PM Laura .J a rrett@cn n. com Subject: Fwd: Background Call Material Attachments: Ian D. Prior ATT Press Release - Embargoed Until Monday, Nov. 20 at 5 p.m .. pdf; ATT00001.htm; Franken Letter.pdf; ATT00002.htm; Warren Letter.pdf; ATT00003.htm; AAG Delrahim Nov. 16 Speech.pdf; ATT00004.htm Principal Deputy Director of Public Affairs Office: 202.616.0911 Cell:- For information on office hours, access to media events, and standard ground rules for interviews, please cf ick here. Begin forwarded message: From: "Abueg, Mark (OPA)" To: "Prior, Ian (OPA)" Subject: FW: Background Call Material FYI From: USDOJ-Office of Public Affairs (SMO} Sent: Monday, November 20, 2017 4:32 PM To: USDOJ-Office of Public Affairs (SMO) Cc: Abueg, Mark (OPA) ; Edwards, Jeremy M. (OPA} Subject: Background Call Material Attached material for the background call. AM {I AN OVERSIGHT Document ID: 0.7.15798.12498 20180509-0004984 DOJ-17-0214-C-000002 ilJ?partment of lfuntitJ? !EMBARGOED UNTIL MONDAY, NOV. 20 AT 5 P.M. NOVEMBER 20, 2017 AT (202) 514-2007 WWW .JUSTICE.GOV TTY (866) 544-5309 !EMBARGOED UNTIL MONDAY NOV. 20 AT 5 P.M. JUSTICE DEPARTMENT CHALLENGES AT&T/DIRECTV'S ACQUISITION OF TIME WARNER Merger Woul Subject: CNN inquiry --AT&T/Time Warner court date Hi all. Any comment on the latest filing from AT&T/Time Warner's attorneys regarding a court date? They're asking for a court date of Feb. 20, 2018, noting that the Justice Department's proposed date - May 7, 2018 - [s after the merger agreement expires. "Defendants' proposed .schedule will not prejudice the Government, which has had ample time already to investigate its case. Further delay is unwarranted and unfair to the Defendants/ the filing reads. Let me know if you have anything to add. 917-83&-0304. Julia Horowitz Breakin-2 News Desk I CNNMonev AM {I OVERSIGHT Document ID: 0.7.15798.14539 20180509-0001909 DOJ-17-0214-C-000031 1 Time Warner Center I 5th floor I New York, NY 10019 (917) 838--0304 (o) (b) (6) c) julia.horowitz@turner.com I @juliakhorowitz AM RICAN OVERSIGHT Document ID: 0.7.15798.14539 20180509-0001910 DOJ-17-0214-C-000032 Edwards, Jeremy M. (OPA) From: Sent: To: Subject: Attachments: Edwards, Jeremy M. (OPA) Wednesday, November 29, 201710:06 AM Abueg, Mark (OPA) ATT Fact Sheet.docx ATT Fact Sheet.docx For your review and approval. AM {I AN OVERSIGHT Document ID: 0.7.15798.14332 20180509-0001912 DOJ-17-0214-C-000033 Abueg, Mark (OPA) From: Sent: To: Cc: Subject: Abueg, Mark (OPA) Tuesday, November 21, 2017 4:32 PM Goldman, David Edwards, Jeremy M. (OPA) RE: CNN request for comment on AT&T lawsuit I was going by the list shown here: https://www.justice.gov/atr/antitrust-case-filings-alpha It only goes back to around the 90s, so I would just add what you have with what you find on that page. Hope that helps. From: Goldman, David [mailto:David.Goldman@turner.com) Sent: Tuesday, November 21, 2017 4:27 PM To: Abueg, Mark (OPA} Subject: Re: CNN request for comment on AT&T lawsuit Thanks Mark! I really appreciate your help. can you tell me which one I'm missing? 1913 - Kingsbury agreement 1956 - Restrict business to telephone service 1984 - Breakup 2007-SBC 2011- TMobile 2017 - Time Warner Thanks again! From: "Abueg, Mark (OPA)" Sent: Nov 21, 2017 4:22 PM To: Goldman, David Cc: Edwards, Jeremy M. {OPA) Subject: RE: CNN request for comment on AT&T lawsuit David, Thanks for checking. On background ... yes, seven is correct. Also, this merger would put the nation's largest traditional video distributor (AT&T/DirecTV) in control of key video programming that its rivals need to compete. The end result would be a substantial lessening of competition in the market for video distribution. Best, Mark Mark Abueg Public Affairs Specialist AM OVERSIGHT Document ID: 0.7.15798.14452 20180509-0004918 DOJ-17-0214-C-000034 u_::,_ uepartmem or Justice Office of Public Affairs Office: (202) 353-6836 Ce II: W>JIIIIIIIIIII Email: mark_abueg@usdoj_gov Website: www_justice.gov From: Goldman, David [mailto:David.Goldman@turner.com] Sent: Tuesday, November 21, 20171:21 PM To: Press Subject: CNN request for comment on AT&T lawsuit Good afternoon, I'm trying to confirm how many times the DOJ has sued AT&Tovertheyears. I believe the number is seven, but I couldn't determine it. I'm also wondering what that says about the relationship between the DOJ and AT&T {if anything at all). Does the DOJ's familiarity with a company have any impact on its enforcement of that company? Thanks so much! -David David Goldman CNN MoneyStream Editor 1 Time Warner Center I Seventh Floor I New York, NY 10019 Office: (212) 275-8520 I Mobile: (b) ( 6) Email: david.qoldman@turner.com AM RI AN OVERSIGHT Document ID: 0.7.15798.14452 20180509-0004919 DOJ-17-0214-C-000035 Prior, Ian (OPA) From: Sent: To: Cc: Subject: Prior, Ian (OPA) Thursday, November 9, 2017 1:38 PM Abueg, Mark (OPA) Flores, Sarah Isgur (OPA) RE: Approved Quote Stephenson himself gave credence to Thursday's statements out of the DOJ. "I have never been told that the price of getting the deal done was selling CNN," Stephenson said at the DealBook conference in New York. https:ljwww.cnbc.com/2017/11/09/government-never-tried-to-force-cnn-sale-in-att-time-warner-deal￾official-says.html Ian D. Prior Principal Deputy Director of Public Affairs Department of Justice Office: 202.616.0911 Cell:- For information on office hours, access to media events, and standard ground rules for interviews, please dick here. From: Abueg, Mark {OPA) Sent: Thursday, November 9, 20171:37 PM To: Prior, Ian (OPA) Cc: Flores, Sarah Isgur {OPA) Subject: RE: Approved Quote Will do. From: Prior, Ian {OPA) Sent: Thursday, November 9, 20171:35 PM To: Abueg, Mark (OPA) Cc: Flores, Sarah Isgur {OPA) Subject: RE: Approved Quote Ian D. Prior Principal Deputy Director of Public Affairs Department of Justice Office: 202.616.0911 Cell: (b) ( 6) For information on office hours, access to media events, and standard ground rules for interv;ews, please click AM ,.. OVERSIGHT Document ID: 0.7.15798.12301 20180509-0006723 DOJ-17-0214-C-000036 !.!!::!.E:· From: Abueg, Mark {OPA) Sent: Thursday, November 9, 20171:19 PM To: Prior, Ian {OPA) Cc: Flores, Sarah Isgur {OPA) Subject: RE: Approved Quote Thank you. From: Prior, Ian (OPA) Sent: Thursday, November 9, 20171:15 PM To: Abueg, Mark (OPA) Cc: Flores, Sarah Isgur {OPA) Subject: Approved Quote (b) (5) Ian D. Prior Principal Deputy Director of Public Affairs Office: 202.616.0911 Cell: (b) ( 6) For information on office hours, access to media events, and standard ground rules for interviews, please click here. AM {I AN OVERSIGHT Document ID: 0.7.15798.12301 20180509-0006724 DOJ-17-0214-C-000037 McKay, Shirley A (OLA) From: McKay, Shirley A {OLA) Sent: To: Thursday, August 10, 2017 10:24 AM Pickell, Lindsay A. {OLA) Subject: WF 3875733 Senator Klobuchar Attachments: Importance: 3875733.Klobuchar.others.incom. 7.11.2017 .pdf; 3875733.ES.ctrl.sheet.rtf High Hi Lindsay (b) (5) Shirley McKay Correspondence Management Analyst Office of Legislative Affairs U.S. Department of Justice - C20530 -direct no. AM {I AN OVERSIGHT Document ID: 0.7.15798.15027 Thank you. 20180509-0007549 DOJ-17-0214-C-000038 Abueg, Mark (OPA) From: Sent: To: Subject: Emajae', (b) (5) Best, Mark Abueg, Mark (OPA} Monday, July 10, 2017 12:32 PM Clements, Emajae (JMD) RE: New York Times Article by Cecilia Kang From: Clements, Emajae (JMD) Sent: Monday, July 10, 201712:0l PM To: Abueg, Mark (OPA} Subject: New York Times Article by Cecilia Kang Hi, I basically annotated the article so I hope this helps. Let me know if you need anything else! Document ID: 0.7.15798.5220 20180509-0007614 DOJ-17-0214-C-000039 "' ,()VERSIGHT Document ID: 0.7.15798.5220 20180509-0007615 DOJ-17-0214-C-000040 J)VERSIGHT Document ID: 0.7.15798.5220 20180509-0007616 DOJ-17-0214-C-000041 .6.t,,/1 ~Ir . .u, .I ,(.)VERSiGHT Document ID: 0.7.15798.5220 20180509-0007617 Document ID: 0.7.15798.5010-000002 20180509-0007543 DOJ-17-0214-C-000042 tinited ~tetrs ~rnetr President Donald J. Trump The White House 1600 Pennsylvania Avenue, NW Washington, DC 20500 Dear President Trump: WASHINGTON, DC 20510 July 11, 2017 As members of the Senate Judiciary Committee, we write to oppose any attempts by White House staff or transition officials to interfere with antitrust law enforcement decisions. In both Democratic and Republican Administrations, antitrust enforcement agencies have made their decisions based on the merits of each individual case, free from political influence. According to a New York Times report from last week, "White House advisers have discussed a potential point of leverage over their adversary [CNN], a senior administration official said: a pending merger between CNN's parent company, Time Warner and AT&T." Six months ago, the press also reported that you met with at least two companies, including AT&T, that were involved in significant acquisitions under antitrust review by the Justice Department before you took office. The AT&T-Time Warner merger should be judged solely on its impact on competition, innovation, and consumers, not as "leverage" for political gain. We hope you agree that political concerns about the content of CNN's press coverage have no place in antitrust enforcement. Any political interference in antitrust enforcement is unacceptable. Even more concerning, in this instance, is that it appears that some White House officials may be attempting to use the Administration's law enforcement authority in an effort to alter or censor the press. Such an action would violate the First Amendment. Accordingly, we respectfully request that the White House provide answers to the following questions: • Have any White House or transition officials attempted to interfere with any ongoing antitrust investigation? • Have any White House or transition officials discussed potential efforts to attempt to influence any pending or future antitrust enforcement action? • Have any White House or transition officials discussed the pending AT&T-Time Warner transaction in connection with CNN? If so, please detail those interactions. AM RICA\J pVERSIGHT Document ID: 0.7.15798.5010-000002 20180509-0007544 DOJ-17-0214-C-000043 • Have any White House or transition officials discussed potential plans to use the pending AT&T-Time Warner transaction as a point of leverage over CNN? Will you pledge that White House officials will not undertake any such effort in the future? • Will you commit that White House staff or officials will not negotiate any settlement of an antitrust investigation? • The White House Counsel has set forth procedures for White House staff to follow in communications with Justice Department employees to prevent the very type of influence suggested in the New York Times article. 1 Has any employee of the White House or adviser to the President (either official or unofficial) had any contact with any Department of Justice employee regarding the AT&T/Time Warner transaction? If so, did those interactions comply with existing policies? • Will you commit to notifying the Chairman and Ranking Member of the Senate Judiciary Committee, as well as the Chairman and Ranking Member of the Antitrust Subcommittee, should any such contacts occur? Thank you for your prompt attention to this request. Sincerely, United States Senator Dianne Feinstein United States Senator a~-~,l#~/41 Al Franken Richard Blumenthal United States Senator United States Senator 1 Memorandum from Donald F. McGahn to All White House staff re: Communications Restrictions with Personnel at the Department of Justice (January 27, 2017) (http://www.politico.com/f/?id=OOOOO l 5a-dde8-d23c-a7ff￾dfef4d530000). AMERICA\J pVERSIGHT 739 House Judiciary: Oversight of the Department of Justice, AG Sessions November 14, 2017 1 GOODLATTE: 2 The Judiciary Committee will come to order. And without objection, the chair is authorized to 3 declare recesses of the committee at any time. We welcome everyone to this morning's hearing 4 on oversight of the Department of Justice. 5 I'll begin by recognizing myself for an opening statement. 6 Good morning. 7 Today we welcome Attorney General Jeff Sessions to the Judiciary Committee's annual 8 Department of Justice Oversight hearing. 9 Mr. Attorney General, you have a long and distinguished career in public service. You've 10 continue that service by leading the Department of Justice, an agency that by its very nature is 11 prone to controversy because of the public's varied opinions on what it seeks to see -- what it 12 means to seek and obtain justice. 13 14 GOODLATTE: 15 However, you clearly understand that the department you lead must have the confidence of the 16 American people, even when your decisions are not always well-received. 17 Your first year leading the Department of Justice has not been without difficulty, which is 18 expected at the outset of a new administration. 19 While much has been done to correct the improper political engagement by the Department of 20 Justice under the Obama administration, more work must be done to ensure the department is 21 operating to impartially administer justice. 22 Our last DOJ oversight hearing was beyond disappointing. Attorney General Loretta Lynch gave 23 the least fulsome and least transparent testimony that I can recall in my time in Congress. It was 24 plainly a disservice to the American people. Ms. Lynch failed to respond substantively to nearly 25 every question posed by members of this committee. Document ID: 0.7.15798.13233-000001 20180509-0000763 DOJ-17-0214-C-000044 AMERICAN PVERSIGHT 740 1 Before Ms. Lynch, former Attorney General Eric Holder became the first attorney general in 2 history to be held in contempt by the House of Representatives for his own stonewalling with 3 regard to documents connected to the reckless Operation Fast and Furious. 4 I expect, Mr. Attorney General, that you will be more willing to candidly answer questions from 5 members on both sides of the aisle. 6 You're going to hear question after question today concerning your knowledge of or involvement 7 with Russia and its alleged efforts to interfere in the 2016 presidential election. Whether it 8 concerns your work on behalf of now-President Trump during the campaign or your service in 9 the Senate, I suspect this theme will be a constant refrain from my friends on the other side of the 10 aisle. 11 While I understand your decision to recuse yourself was an effort by you to do the right thing, I 12 believe you, as a person of integrity, would have been impartial and fair in following the facts 13 wherever they lead. 14 I have chosen, as chairman of this committee, to let Special Counsel Robert Mueller do his job 15 free from undue political influence. 16 At the same time, however, this committee will do its duty and conduct oversight of the 17 Department of Justice. To that end, we sent two letters to you, one in July and another in 18 September, calling on you to name a second special counsel to restore the public's confidence in 19 our justice system. Numerous matters connected to the 2016 election remain unresolved. 20 To date, the department has not appointed a second special counsel. Consequently, this 21 committee had no choice but to open our own joint investigation with the House Oversight and 22 Government Reform Committee to review DOJ and FBI's handling of the investigation into 23 former Secretary Hillary Clinton and her mishandling of classified information. 24 25 26 GOODLATTE: Document ID: 0.7.15798.13233-000001 20180509-0000764 DOJ-17-0214-C-000045 AMERICAN PVERSIGHT 741 1 As we said earlier this year, it is incumbent on this committee in oversight capacity to ensure that 2 the agencies we oversee are above reproach and that the Justice Department, in particular, 3 remains immune to accusations of politicization. Whoever is Attorney General, the Justice 4 Department must even-handedly administer justice. You have recused yourself from matters 5 stemming from the 2016 election, but there are significant concerns that the partisanship of the 6 FBI and the Department has weakened the ability of each to act objectively. 7 I look forward to hearing your thoughts on this and what steps you are taking to remove politics 8 from law enforcement. However, these investigations are but a few of the many important issues 9 we need to discuss today. For instance, we just overwhelmingly reported the USA Liberty Act, 10 out of committee last week. This bipartisan legislation would re-authorize section 702 of the 11 Foreign Intelligence Surveillance Act. The administration has chosen to oppose any reform of 12 the law. I understand the desire for a clean re-authorization of this vital program. However, I 13 believe this stance is a miscalculation that risks further eroding trust in our intelligence 14 apparatus. 15 We hope we can work with you now that the USA Liberty Act which re-authorizes a law that is 16 vital to our nation's battle against terrorism, while protecting American civil liberties has been 17 reported out of the committee. This is especially important given the ongoing threat of terrorist 18 attacks in the United States. As we all know, not two weeks ago, eight people were killed and 19 almost a dozen injured when an ISIS-inspired jihadist drove a rented pick up truck into a 20 crowded bicycle path near the World Trade Center in New York. 21 The terrorist threat is real and ongoing. We cannot afford to play politics with national security. I 22 also look forward to continuing to work with you on efforts to reform our nation's criminal 23 justice system. There is bipartisan support to do this in Congress, and with your help we can 24 make changes that crack down on violent offenders while also doing more to rehabilitate federal 25 prisons and curb abuses in the system as well as excessive punishments. 26 To your credit, since you assumed leadership of the Department of Justice, there has been a 27 significant increase in the prosecution of firearms offenses in the United States. For years I have 28 criticized lax enforcement of the gun laws already on the books. Enforcing these laws is the most 29 effective way to combat violent crime in our cities and neighborhoods. Under your leadership, Document ID: 0.7.15798.13233-000001 20180509-0000765 DOJ-17-0214-C-000046 AMERICAN PVERSIGHT 742 1 the number of defendants charged with unlawful possession of a firearm has increased by nearly 2 25 percent. 3 The number of defendants charged with armed drug trafficking has increased 10 percent. I 4 commend you for your focus on these prosecutions because they will help make our streets safer. 5 There are many other matters on which we share common ground, especially when it comes to 6 rectifying the failures of the Obama Administration. For example, earlier this year, the House 7 passed legislation to ban settlement payments to non-victim third parties following your policy 8 directive to shut down the use of such mandatory donations. 9 These reform initiatives followed a concerted effort by the Obama Administration to use 10 settlements to benefit its political allies. We commend your efforts to combat illegal 11 immigration, protect our citizens from criminal aliens and to fight back against, so called, 12 sanctuary cities. More then two years have passed since Kate Steinle was murdered by an illegal 13 immigrant who had been deported five times. We have addressed this issue head on by moving 14 legislation to combat sanctuary cities and find and remove criminal gang members. 15 Mr. Attorney General, our country is at a crossroads. Our constituents are gravely concerned that 16 our justice system does not work for them. Under your leadership, the Justice Department has 17 taken strides to mitigate the harms done in the prior administration. I implore you to work with 18 us to continue that trend and I thank you sincerely for your appearance here today. 19 I now recognize the ranking member of the committee, the gentleman from Michigan, Mr. 20 Conyers, for his opening statement. 21 22 CONYERS: 23 Thank you, Mr. Chairman. 24 Top of the morning. In the ordinary course of business, any one of a dozen topics related to the 25 Department of Justice would be worthy of its own hearing. And to be clear, I would rather spend 26 our time today discussing the upkeep, the criminal justice system, the enforcement of civil rights 27 and the work we must all do to ensure access to the ballot box. Document ID: 0.7.15798.13233-000001 20180509-0000766 DOJ-17-0214-C-000047 AMERICAN PVERSIGHT 743 1 Instead, we must spend our time debating the troubles of a wayward administration; how the 2 attorney general conducts himself before Congress, how President Trump undermines the 3 integrity of the justice system and how the Department continues to ignore the oversight requests 4 of this committee. 5 Although this is the attorney general's first appearance before the House, he's already made three 6 visits to our colleagues in the Senate. At his confirmation hearing, he testified that he did not 7 have communications with the Russians. Last month, he testified that a continuing exchange of 8 information between Trump surrogates and intermediaries for the Russian government did not 9 happen, at least to my knowledge, and not with me. 10 We now know, of course, that neither of these statements is true. Shortly after the attorney 11 general made the first comment, the Washington Post reported that he met with the Russian 12 ambassador at least twice during the campaign. The past month, we've also learned that the 13 attorney general must have been very much aware of a continuing exchange of information 14 between the Trump campaign and the Russian government. 15 In charging documents unsealed last month, George Papadopoulos, a foreign policy adviser to 16 the Trump campaign, admits to extensive communications with Russian contacts. At a March 17 31st, 2016, meeting of the campaign's national security advisory committee attended by 18 Candidate Trump and chaired by Senator Sessions, Mr. Papadopoulos stated, in sum and 19 substance, that he had connections that could help arrange a meeting -- meeting between Then￾20 Candidate Trump and President Putin. 21 It does not matter and has been reported that the attorney general remembers this meeting after 22 the fact. Remembers it so vividly, in fact, that two unnamed sources say the Senator shot George 23 down. Under oath, knowing in advance that he would be asked about this subject, the Attorney 24 General gave answers that were, at best, incomplete. I hope the Attorney General can provide 25 some clarification on this problem in his remarks today. 26 I also hope that he can assure us that the Department is weathering near daily attacks on its 27 independence by President Trump and that no office of the Department is being used to pressure 28 the president's political enemies. Document ID: 0.7.15798.13233-000001 20180509-0000767 DOJ-17-0214-C-000048 AMERICAN PVERSIGHT 744 1 In recent months, President Trump has attacked the beleaguered attorney general and criticized 2 his, "very weak position on Hillary Clinton crimes", in quotation. The president has talked 3 openly about firing the leadership of the Department including the attorney general, the deputy 4 attorney general, the former acting director of the FBI and Special Counsel, Robert Mueller. 5 He did fire former FBI Director Comey in his own words quote, "Because of that Russia thing 6 with Trump and Russia", end quotation. As well as acting Attorney General Sally Yates and all 7 46 sitting United States attorneys. 8 Last year he denigrated a federal judge because of his quote, "Mexican heritage" unquote and 9 Judge Curiel was born in Indiana, by the way. Last month in the radio interview President Trump 10 said he was,"Very unhappy with the Justice Department." 11 Hours later, he proclaimed the military justice system, "A complete and total disgrace." But the 12 one that sticks with me is the President's July interview with the New York Times. In that 13 interview, he begins by once again attacking the Attorney General's credibility. "Sessions never 14 should have recused himself", the president complains. Then the conversation takes a sinister 15 turn. 16 "When Nixon came along, out of courtesy, the FBI started reporting to the Department of 17 Justice. But the FBI person really reports directly to the president of the United States." He goes 18 on. "I could have ended the Flynn investigation just by saying they say it can't be obstruction 19 because you can say it's ended, it's over." 20 As is often the case, the president requires some correction. The director of the FBI reports 21 directly to the Attorney General and has -- since the founding of the Bureau, it can be obstruction 22 of justice if the president orders and investigation closed with a corrupt motive. But what strikes 23 me about these comments is the president's view that the criminal justice system serves him and 24 not the public. 25 President Trump seems to believe that on a whim he can bring pressure to bear on his enemies, 26 dismiss charges against his allies and insulate himself and his family from any consequence. I 27 cannot over-emphasize the danger this perspective poses to our Republic and I've served on this 28 committee long enough to remember another president who shared this view. Document ID: 0.7.15798.13233-000001 20180509-0000768 DOJ-17-0214-C-000049 AMERICAN PVERSIGHT 745 1 I was, myself, on Richard Nixon's enemies list. And although we were to hold that 2 administration accountable, our work is not complete. We must all remember our common 3 responsibility to prevent that kind of abuse from happening again. 4 I will look to the attorney general's partnership in this effort, but I've begun to worry about his 5 resolve. Last night, in a letter sent by the department to Chairman Goodlatte without so much as 6 a copy to the ranking member, by the way, the assistant attorney general seems to leave the door 7 open to appointing a new special counsel to cater to the president's political needs. 8 The fact that this letter was sent to the majority without the customary and appropriate notice to 9 me, indicates that the charge given to the Department officials to evaluate these issues has 10 political motivations. Now, in his own words, the attorney general is recused from any questions 11 involving investigations that involve Secretary Clinton. 12 Further, we cannot refer an investigation to a second counsel if we lack the evidence to predicate 13 a criminal investigation in the first place. Virtually, every Clinton-related matter that President 14 Trump complains about has been well litigated, carefully examined and completely debunked. 15 Still, to quote former Attorney General Michael Mukasey, "Putting political opponents in jail for 16 offenses committed in a political setting is something that we don't do here." The threat alone 17 resembles in his words, "a banana republic". 18 Finally, there is the matter of routine oversight between hearings. In the recent history of this 19 committee, new attorneys generally usually come to see us within two or three months of taking 20 office. 21 No attorney general in recent memory has taken more than six months before making an 22 appearance here. Attorney General Sessions has broken that norm. He has had more than 10 23 months to settle in, making our communications with the Department between hearings that 24 much more important. 25 To date, my colleagues and I have sent more than 40 letters to the Trump administration asking 26 for information necessary to carry out our oversight responsibilities. Document ID: 0.7.15798.13233-000001 20180509-0000769 DOJ-17-0214-C-000050 AMERICAN PVERSIGHT 746 1 We have sent more than a dozen of these letters directly to the Attorney General. To date, we 2 have not received a single substantive response. We can disagree on matters of policy, Mr. 3 Attorney General, but you cannot keep us in the dark forever. 4 When we make a reasonable oversight request, we expect you to reply in a prompt and 5 responsive manner, and I hope you can explain why your department has chosen to ignore these 6 letters. More importantly, I hope that you will be more forthcoming with your answers, both in 7 your testimony today and in the weeks to come. And I look forward to your testimony. 8 And Mr. Chairman, I thank you and yield back the balance of my time. 9 10 GOODLATTE: 11 Thank you, Mr. Conyers. 12 Without objection, all other members' opening statements will be made a part of the record. We 13 welcome our distinguished witness and if you would please rise, I'll begin by swearing you in. 14 Please raise your right hand. Do you solemnly swear that the testimony that you are about to give 15 shall be the truth, the whole truth, and nothing but the truth, so help you God? 16 17 SESSIONS: 18 (OFF-MIKE) 19 20 GOODLATTE: 21 Thank you. Let the record show that the witness answered in the affirmative. Mr. Jeff Sessions 22 was sworn in as the 84th Attorney General of the United States on February 9th, 2017. From 23 1996 to his confirmation to lead the Department of Justice, Mr. Sessions served as a United 24 States Senator for Alabama. Previously, Attorney General Sessions served as an assistant United 25 States attorney and United States attorney for the Southern District of Alabama, attorney general, 26 and captain in the United States Army Reserve. Document ID: 0.7.15798.13233-000001 20180509-0000770 DOJ-17-0214-C-000051 AMERICAN PVERSIGHT 747 1 Attorney General Sessions is a graduate of Huntingdon College and the University of Alabama 2 Law School. Welcome, Attorney General Sessions. Your entire written statement will be entered 3 into the record and we ask that you summarize your testimony in five minutes, but I noted that 4 the ranking member took a few more minutes than that. If you find that necessary, please feel 5 free to do that as well. Welcome. 6 7 SESSIONS: 8 Thank you very much, Mr. Chairman. 9 It's an honor to be before this distinguished committee, having served 20 years on your 10 counterpart in the Senate -- the Senate Judiciary Committee. Mr. Chairman, I must note that I 11 note with regret your announcement on retirement and I know that our relationship has been 12 good in the past and I hope it will continue to be good as you serve here. You've done a fabulous 13 job in leading this committee. 14 On my first day as attorney general, I spoke about, quote, "The critical role we at the department 15 play in maintaining and strengthening the rule of law, which forms the foundation of our liberty, 16 our safety and our prosperity. In this rule of law, we are blessed beyond all nations." So I truly 17 believe that. And at this Department, we must do all we can to ensure that it is preserved and 18 advanced. Such ideals transcend politics. 19 From that day to today, we at the Department of Justice have worked to be faithful to that 20 mission. Let me share some things we've done initially. The president sent us an order to reduce 21 crime, not to allow crime to continue to increase, and we embraced that mission. The violent 22 crime rate has risen and the homicide rate has risen by more than 20 percent in just two years, 23 really after 30 years of decline in violent crime. 24 25 26 SESSIONS: 27 After a careful review, we have established a reinvigorated Project Safe Neighborhood program 28 as a foundational policy for public safety. It has been proven to get results. In its first seven years Document ID: 0.7.15798.13233-000001 20180509-0000771 DOJ-17-0214-C-000052 AMERICAN PVERSIGHT 748 1 of implementation, PSN reduced violent crime by 4.1 percent with case studies showing 2 reductions in certain areas where it was intensely applied of up to 42 percent. 3 So we are also focusing on criminals with guns as you mentioned, Mr. Chairman, and we've seen 4 a 23 percent increase in gun prosecutions in the second quarter of this fiscal year, my first year. 5 And I'm honored to lead the superb men and women of the FBI Drug Enforcement 6 Administration, ATF and the United States Marshall Service who work together every day with 7 our state and local partners in this core crime fighting mission that is the responsibility of the 8 department. 9 Last year, we saw a staggering 61 percent increase in the number of law enforcement officers 10 killed in the line of duty because of a felony. And on average, more than 150 officers were 11 assaulted every single day. These numbers are unacceptable. Fortunately, the president 12 understands this. He's directed us at the beginning of my administration to back on men and 13 women in blue. We are making it clear that we stand with our law enforcement partners 100 14 percent. They are the solution to crime, not the problem. 15 We've also protected the rule of law in our own department. We've prohibited so called third 16 party settlements that were being used to bankroll special interest groups. We've settled civil 17 cases regarding the Affordable Care Acts Birth Control Mandate settled the cases of many 18 groups of tax exempt on groups who's status was significantly and wrongfully delayed by the 19 internal revenue service. 20 We've also provided legal counsel to this Administration in favor of ending several other 21 unlawful policies. This includes President Trump's order ending billions in funding for insurance 22 companies that were non-appropriated by Congress under the Affordable Care Act. This action, 23 which the House had filed a lawsuit to stop -- put an end to one of the most dramatic erosions of 24 the congressional appropriations power in our history. House members, you are correct to 25 challenge that. You won in the district court. We believe you are correct, and we had that -- we 26 reversed the policy and had that matter withdrawn -- the policy withdrawn. 27 We put an end to the actions by the previous administration to circumvent Congress's duly path 28 to immigration laws on the DACA. The policy gave individuals that were here illegally Document ID: 0.7.15798.13233-000001 20180509-0000772 DOJ-17-0214-C-000053 AMERICAN PVERSIGHT 749 1 certificates of lawful status, work permits, and the right to participate in Social Security. We 2 withdrew that unlawful policy and now the issue is in the hands of Congress, really where it 3 belongs. We have filed briefs defending properly-enacted state voter identification laws, lawful 4 re- districting plans, religious liberty, and free speech on college campuses. 5 In short, it is our mission through the report -- to restore the American people's confidence in the 6 Department of Justice by defending the rule of law and enforcing the laws as you have passed 7 them. And it is a mission we are honored to undertake. 8 9 10 SESSIONS: 11 In response to the letters from this committee and others, I've directed Senior Federal Prosecutors 12 to make recommendations as to whether any matters not currently under investigation should be 13 open. Whether any matters currently under investigation require further resources and whether 14 any matters under consideration may merit the appointment of a special counsel. 15 On -- and as you are aware, the Department's inspector general has an active review of 16 allegations that FBI policies and procedures were not followed, last year, in a number of matters 17 that you have addressed. 18 And, Mr. Chairman, the letter was addressed to you because it was a response to your letter and 19 that's how it was sent. We will make such decisions without regard, hear me, without regard to 20 politics, ideology or bias. 21 As many of you know, the Department has a long-standing policy not to confirm or deny the 22 existence of investigations. This policy can be frustrating, I understand, especially when there is 23 great public interest about a matter, but it enhances justice when we act under the law, with 24 professionalism and discipline. 25 This policy necessarily precludes any discussion on cases I may be recused from because to do 26 so would confirm the existence of underlying investigations. To the extent a matter comes to the 27 attention of my office, that may warrant consideration of recusal, I review the issue, consult with Document ID: 0.7.15798.13233-000001 20180509-0000773 DOJ-17-0214-C-000054 AMERICAN PVERSIGHT 750 1 the appropriate Department of Ethics officials and make my decision as I promised the Senate 2 committee, when I was confirmed. 3 Lastly, I would like to address the false charges made about my previous testimony. My answers 4 have not changed. I've always told the truth and I have answered every question as I understood 5 them to the best of my recollection as I will continue to do today. I would like to address recent 6 news reports regarding meetings during the campaign, attended by Joyce Papadopoulos and 7 Carter Page, among others. 8 Frankly, I had no recollection of this meeting until I saw these news reports. I do now recall that 9 the March 2016 meeting at the Trump Hotel that Mr. Papadopoulos attended, but I've no clear 10 recollection of the details of what he said at that meeting. 11 After reading his account and to the best of my recollection, I believe that I wanted to make clear 12 to him that he would not authorize to represent the campaign with the Russian government or 13 any other foreign government for that matter. 14 But I did not recall this event which occurred 18 months before my testimony of a few weeks 15 ago and I would gladly have reported it had I remembered it because I pushed back against his 16 suggestion that I thought may have been improper. 17 As for Mr. Page, while I do not challenge his recollection, I have no memory of his presence at a 18 dinner at the Capitol Hill Club or any passing conversation he may have had with me as he left 19 the dinner. All of you have been in campaigns, let me just suggest, but most of you have not been 20 displayed in a presidential campaign and none of you had a part in the Trump campaign. 21 And it was a brilliant campaign, I think, in many ways, but it was a form of chaos every day 22 from day one. We traveled some times to several places in one day. Sleep was in short supply 23 and I was still a full-time Senator at a very -- with a very full schedule. During this year, I've 24 spent close to 20 hours testifying before Congress -- before today. 25 I have been asked to remember details from a year ago, such as who I saw on what day, in what 26 meeting and who said what to when? In all of my testimony, I can only do my best to answer 27 your questions as I understand them and to the best of my memory. But I will not accept, and Document ID: 0.7.15798.13233-000001 20180509-0000774 DOJ-17-0214-C-000055 AMERICAN PVERSIGHT 751 1 reject accusations, that I have ever lied. That is a lie. Let me be clear, I have, at all times, 2 conducted myself honorably and in a manner consistent with the high standards and 3 responsibilities of the Office of Attorney General which I revere. 4 I spent 15 years in that department. I love that department. I honor that department and will do 5 my dead-level best to be worthy of your attorney general. As I said before, my story has never 6 changed. I've always told the truth and I've answered every question to the best of my 7 recollection and I will continue to do so today. 8 With that, Mr. Chairman, I'm honored take your questions. 9 10 GOODLATTE: 11 Well, thank you, General Sessions. We'll now proceed under the five-minute rule with questions 12 and I'll begin by recognizing myself. Under your leadership, the prosecution of firearms offenses 13 have increased 23 percent over the same period of the previous year. Furthermore, the number of 14 defendants charged with using a firearm and violent crimes of drug trafficking rose 10 percent 15 over the previous year. 16 We have a slide, which shows the increase as compared to the Obama era numbers. What do 17 these increased prosecutions of firearms offenses indicate about the Department of Justice's 18 commitment to fighting violent crime, particularly with the use of firearms in this country? 19 20 SESSIONS: 21 Mr. Chairman, as a formal federal prosecutor who emphasized gun prosecutions, I've long 22 believed that they have a significant impact in reducing violent crime. Professors, earlier this 23 year, have explained that they share that view based on scientific analysis. It will be a high 24 priority of ours. You are correct that prosecutions fell. One incident that was raised during the 25 Texas -- terrific, horrible shooting at the church there in South Sutherland, Texas, was the ability 26 of an individual to get a firearm and whether or not they filed correctly their form before you get 27 one that's -- it requires questions about criminal convictions and court- martials. Document ID: 0.7.15798.13233-000001 20180509-0000775 DOJ-17-0214-C-000056 AMERICAN PVERSIGHT 752 1 Those prosecutions, I've noticed, have dropped by over 50 percent in the last three or four years. 2 I think those are worthy prosecutions. And when a criminal is carrying a gun during a criminal 3 act of some other kind, that is a clear and present danger to the public. And those cases are 4 important and they impact reduction of crime. 5 6 GOODLATTE: 7 As you're aware, I and a majority of the members of this committee have, on multiple occasions, 8 requested a special counsel to investigate Former Secretary Hillary Clinton's mishandling of 9 classified information, and the actions of Former Attorney General Lynch with respect to former 10 FBI Director Comey's decision not to prosecute Former Secretary Clinton. 11 I'm in receipt of the Department's letter from yesterday, stating that, senior federal prosecutors 12 will review our letters and make recommendations as to whether any matters not currently under 13 investigation should be open, require further resources or merit the appointment of a special 14 counsel. 15 Do I have your assurance that these matters will proceed fairly and expeditiously? 16 17 SESSIONS: 18 Yes, you can, Mr. Chairman. And you can be sure that they will be done without political 19 influence, and they'll be done correctly and properly. 20 21 GOODLATTE: 22 You also reference an ongoing Inspector General investigation into many of the matters we have 23 raised. Will you ensure that the I.G. briefs this committee on his findings in closed session if 24 necessary? 25 26 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000776 DOJ-17-0214-C-000057 AMERICAN PVERSIGHT 753 1 I will do my best to comply with that. The Inspector General is able to announce investigations 2 in a way that we do not on the normal criminal process side of Department of Justice and I 3 assume he would be able to do that. 4 5 GOODLATTE: 6 Over the past year, we have seen numerous apparent disclosures of unmasked names of U.S. 7 citizens in the context of intelligence reports. Which crimes are violated when these unmasked 8 names are disclosed? For example, to the press. How does the Department of Justice investigate 9 such unauthorized disclosures? 10 11 SESSIONS: 12 Mr. Chairman, I could implicate a number of legal prohibitions and it could be, clearly, a release 13 of classified information contrary to law, and it's a very grave offense and certainly goes against 14 the core policies of this government to protect those matters from disclosure. 15 And the second part of your question was? 16 17 GOODLATTE: 18 How the department investigates such unauthorized disclosures? 19 20 SESSIONS: 21 We have members of the committee -- we had about nine open investigations of classified leaks 22 in the last three years, we have 27 investigations open today. We intend to get to the bottom of 23 these leaks. I think it reached -- has reached epidemic proportions. It cannot be allowed to 24 continue and we will do our best effort to ensure that it does not continue. 25 26 GOODLATTE: 27 And on April 11th, you issued a memorandum to all federal prosecutors requesting that they 28 make prosecution of certain immigration offenses a higher priority. To your knowledge, have the Document ID: 0.7.15798.13233-000001 20180509-0000777 DOJ-17-0214-C-000058 AMERICAN PVERSIGHT 754 1 number have federal prosecutions increased nationwide, for offenses, such as harboring aliens, 2 improper entry and illegal reentry? 3 4 SESSIONS: 5 I do not have the statistics on that, but I believe there has been some increases in those cases. 6 One thing we've seen is a reduction of attempts to enter the country illegally and that is good 7 news and should result in some decline in some prosecutions. 8 9 GOODLATTE: 10 And finally, as you know, this committee did a great deal of work to enact criminal justice 11 reform legislation last Congress. Will you continue to work in good faith with me and the 12 members of this committee, on both sides of the aisle, to identify and craft responsible reforms? 13 14 SESSIONS: 15 I certainly will, Mr. Chairman. 16 17 GOODLATTE: 18 Thank you General Sessions. I now recognize the ranking member of the committee, Mr. 19 Conyers, for five minutes. 20 21 CONYERS: 22 Thank you, Mr. Chairman. 23 And welcome again, Mr. Attorney General. I'd like to begin by putting a few statements by the 24 president up on the screen. The first from July 24th, 2017. "So why aren't the committees and 25 investigators, and of course, our beleaguered Attorney General looking into crooked Hillary 26 crimes and Russia relations?" Document ID: 0.7.15798.13233-000001 20180509-0000778 DOJ-17-0214-C-000059 AMERICAN PVERSIGHT 755 1 The second, from November the 3rd. "Everybody's asking why the Justice Department and the 2 FBI isn't looking at all of the dishonesty going on with crooked Hillary and the Dems", in 3 quotation. 4 The third, also from November 3rd. "Pocahontas just stated that the Democrats lead by the -- 5 lead by the legendary crooked Hillary Clinton rigged the primaries. Let's go to the FBI and 6 Justice Department." I believe he is referring to Senator Elizabeth Warren in that last one. When 7 Richard Nixon spoke about us that way at least he had the courtesy to do it behind closed doors. 8 Mr. Attorney General, a few questions for you yes or no, please. In a functioning democracy is it 9 common for the leader of the country to order the criminal justice system to retaliate against his 10 political opponents? 11 12 SESSIONS: 13 Is that a question? 14 15 CONYERS: 16 Yes, that's the question. 17 18 SESSIONS: 19 Is it proper? Is that what you're ... 20 21 CONYERS: 22 No, you answer to me whether it is yes or no, your response. 23 24 SESSIONS: 25 But, I didn't quite catch the beginning of the question. I'm sorry. 26 27 CONYERS: Document ID: 0.7.15798.13233-000001 20180509-0000779 DOJ-17-0214-C-000060 AMERICAN PVERSIGHT 756 1 All right. In a functioning democracy, is it common for the leader of the country to order the 2 criminal justice system to retaliate against his political opponents? 3 4 SESSIONS: 5 Mr. Conyers, I would say that it's -- the Department of Justice can never be used to retaliate 6 politically against opponents and that would be wrong. 7 8 CONYERS: 9 I interpret that as no. You... 10 11 SESSIONS: 12 The answer stands for itself, I guess. 13 14 CONYERS: 15 Well, I would -- just that would make it a little easier if you just responded yes or no, if you can. 16 Here's another. Should the President of the United States make public comments that might 17 influence a pending criminal investigation? 18 19 SESSIONS: 20 Should he take great care in those issues. 21 22 CONYERS: 23 Could you respond yes or no? 24 25 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000780 DOJ-17-0214-C-000061 AMERICAN PVERSIGHT 757 1 Well, I don't know exactly the facts of what you're raising and what amounts to the concern you 2 have. I would say it's improper to influence -- it would be -- a president cannot improperly 3 influence an investigation. 4 5 CONYERS: 6 OK. 7 8 SESSIONS: 9 And I have not been improperly influenced and would not be improperly influenced. The 10 president speaks his mind. He's bold and direct about what he says, but people elected him. But 11 we do our duty every day based on the law and the facts. 12 13 CONYERS: 14 Reclaiming my time. I'm not -- I'm not impugning these comments to you or what you would do 15 in advance. Last night, sir, the assistant attorney general sent the chairman a letter suggesting that 16 the attorney general has directed senior federal prosecutors to evaluate certain issues like the sale 17 of Uranium One in 2010. 18 Now, at your confirmation hearing, you said, "I believe the proper thing for me to do would be to 19 recuse myself from any questions involving those kinds of investigations that involve Secretary 20 Clinton and that were raised during the campaign or to be otherwise connected to it." Now, for 21 my yes or no question. Are you recused from investigations that involve Secretary Clinton? 22 23 24 SESSIONS: 25 Mr. Chairman, it's -- I cannot answer that yes or no because under the policies of the Department 26 of Justice, to announce recusal in any investigation would reveal the existence of that 27 investigation. And th e top ethics officials have advised me I should not do so. Document ID: 0.7.15798.13233-000001 20180509-0000781 DOJ-17-0214-C-000062 AMERICAN PVERSIGHT 758 1 2 GOODLATTE: 3 The time of the gentleman has expired. The Chair recognizes the gentleman from Wisconsin, Mr. 4 Sensenbrenner, for five minutes. 5 6 SENSENBRENNER: 7 Thank you very much. 8 Welcome, Mr. Attorney General. We're debating whether Section 702 should be reauthorized 9 and I want to talk about that issue. At the beginning, let me show you a poster that my campaign 10 committee put up on the University of Whitewater campus in the 2014 election, during the 11 debate on the USA Liberty Act. 12 And it says, "The government knows what you did last night. The NSA has grabbed your phone 13 calls, texts, Facebook posts and e-mails. Jim Sensenbrenner thinks that that's an outrageous 14 invasion of your privacy", and it shows that I passed the bill and asked the students to vote for 15 me. It worked. My percentage on that campus went up 20 points from the previous election. 16 Now, we're talking about many of the same issues in terms of Section 702. And the Foreign 17 Intelligence Surveillance Act was designed to collect foreign intelligence, not domestic 18 intelligence. But in reality, we know that a vast number of Americans' communications are also 19 collected. 20 The committee took a great step in trying to balance security and privacy last week when we 21 reported about the USA Liberty Act, which made significant changes to the program. Notably, 22 this legislation specifies two ways the government can query the information under Section 702, 23 either foreign intelligence or evidence of a crime. USA Liberty Act ensures that the government 24 does not abuse 702 by requiring that a warrant be issued to access content after querying 25 information for evidence of a crime. 26 Now, Attorney General Sessions, you have stated on several occasions that you believe that a 27 warrant requirement would hinder the government's ability to detect and stop terrorists, yet this Document ID: 0.7.15798.13233-000001 20180509-0000782 DOJ-17-0214-C-000063 AMERICAN PVERSIGHT 759 1 bill already provides the government to move forward without a warrant on foreign intelligence 2 in emergency situation. 3 Why can't the USA Liberty Act be the compromise? Can't we allow the intelligence community 4 to stop terrorists while protecting the constitutional rights of Americans? 5 6 SESSION: 7 Well, we can and constitutional rights of Americans should be protected. And I know you 8 worked on the Patriot Act when it came up with Senator Hatch and Senator Leahy and others. 9 And I know you're a champion of civil liberties. So I would just say that we can do that. The act, 10 as written, as in law today, has been approved by the courts and has not been found to be in 11 violation of the law. And so, that's first and foremost. I know the committee has decided to put 12 some additional restrictions on the way the act is conducted. 13 We did not think that was lawfully required. Congress can make its own decisions and we'll 14 continue to be able to share our thoughts about how the legislation should be crafted. 15 16 SENSENBRENNER: 17 Well, Mr. Attorney General, the day before the committee marked up this bill, the Justice 18 Department was actively lobbying members of the committee to oppose the measure, stating that 19 it would dismantle Section 702. 20 Now, this is a huge gamble because 702 expires at the end of the year. We have a very short 21 timeline and I want to ask you whether yes or no, following my friend from Michigan, you want 22 to risk the real possibility that this program will expire by insisting upon a clean reauthorization 23 without a sunset? 24 25 SESSIONS: 26 No, we don't want to take that risk. Document ID: 0.7.15798.13233-000001 20180509-0000783 DOJ-17-0214-C-000064 AMERICAN PVERSIGHT 760 1 2 SENSEBRENNER: 3 Will you commit to working with Congress and not against us to make sure that Section 702 is 4 reauthorized, either the way you want it or the way we want it? 5 6 SESSIONS: 7 Mr. -- I almost said Mr. Chairman. I know you've held that office. Congress gets to dispose, we 8 get to give our opinion. I believe the act, as passed, and has been reauthorized with an even 9 larger vote last time, is constitutional. 10 I believe it works and I am worried about additional burdens, particularly a warrant requirement 11 which could be exceedingly damaging to the effectiveness of the act. We're willing to talk to you 12 about some of the concerns that exist out there. Hopefully we can work our way through it and 13 accept the concerns and fix the concerns you have without going too far. 14 15 SENSENBRENNER: 16 With all due respect, there is an emergency exemption in the USA Liberty Act, as reported from 17 the committee, and that should take care of the problem. And yet, people in your Department 18 were saying this was no good. 19 I take your offer at face value and I will let you know if I hear of members of your Department 20 actively lobbyin g to defeat the bill rather than to work something out. Yield back the balance of 21 my time. 22 23 SESSIONS: 24 I know you'll let us know, Mr. Sensenbrenner. 25 26 GOODLATTE: 27 The Chair recognizes the gentleman from New York, Mr. Nadler, for five minutes. Document ID: 0.7.15798.13233-000001 20180509-0000784 DOJ-17-0214-C-000065 AMERICAN PVERSIGHT 761 1 2 NADLER: 3 Thank you. 4 Mr. Attorney General, following up on the questions from Mr. Conyers, at your confirmation 5 hearing you said, "I believe the proper thing for me to do would be recuse myself from any 6 questions involving these kinds of investigations that involve Secretary Clinton and that were 7 raised during the campaign to be otherwise connected to it." Close quote. Do you stand by that 8 statement? Yes or no? 9 10 SESSIONS: 11 Yes. 12 13 NADLER: 14 Thank you. Now I want to show you an image from March 31st, 2016, of the meeting of the 15 Trump campaign National Security Advisory Committee, which you chaired, with yourself in 16 attendance along with then-candidate Donald Trump and Mr. George Papadopoulos. 17 Mr. Papadopoulos pled guilty in October 5th to making false statements the FBI. The charging 18 papers filed by Special Counsel Mueller describe the March 31st meeting with the Papadopoulos 19 told the group that he had connections and could help arrange a meeting between Donald Trump 20 and Vladimir Putin. 21 After the meeting, Mr. Papadopoulos continued to communicate with the Russian government on 22 behalf of the Trump campaign and appears have told several senior campaign officials about. 23 Now here's the problem, on October 18th of this year, you said under oath in front of the Senate 24 Judiciary Committee quote, a continuing exchange of information between Trump surrogates and 25 intermediaries for the Russian government did not happen. Document ID: 0.7.15798.13233-000001 20180509-0000785 DOJ-17-0214-C-000066 AMERICAN PVERSIGHT 762 1 At least not to my knowledge and not with me. Senator Franken asked, you don't believe that 2 surrogates from the Trump campaign had communications with the Russians? To which you 3 responded, "I did not them not aware of anyone else that did." Unquote. 4 Now, we now know, that one, the campaign had communication with the Russians through Mr. 5 Papadopoulos and others, and two, you seem to have been aware of the fact at the time. So, let's 6 try and correct the earlier testimony now for the record. 7 Yes or no, did you chair the March 31, 2016, meeting of the National Security Advisory 8 Committee? 9 10 SESSION: 11 I did chair that meeting. 12 13 NADLER: 14 Thank you. Yes or no. Did Mr. Papadopoulos mention his outreach to the Russian government 15 during that meeting? 16 17 SESSIONS: 18 He made some comment to that effect as I remember after having read in a newspaper. 19 20 NADLER: 21 I asked for yes or no. I don't have time. 22 23 SESSIONS: 24 All right. 25 26 NADLER: Document ID: 0.7.15798.13233-000001 20180509-0000786 DOJ-17-0214-C-000067 AMERICAN PVERSIGHT 763 1 There are reports that you shut George down, unquote, when he proposed that meeting with 2 Putin. Is this correct yes or no? 3 4 SESSIONS: 5 Yes, I pushed back. I'll just say it that way because it was ... 6 7 NADLER: 8 Yes. Your answer is yes. So, you are obviously concerned by Mr. Papadopoulos's connections 9 and his possibly arranging a meeting with Putin. Now, again, yes or no, did anyone else at that 10 meeting, including Then-Candidate Trump react in any way to what Mr. Papadopoulos had 11 presented. 12 13 SESSIONS: 14 I don't recall. 15 16 NADLER: 17 OK. So your testimony is that neither Donald Trump nor anyone else at the meeting expressed 18 any interest in meeting the Russian president or had any concerns about communications 19 between the campaign and the Russians? 20 21 SESSIONS: 22 I don't recall it. 23 24 NADLER: 25 OK. Now we know from multiple sources, including the Papadopoulos guilty plea, Carter Page's 26 interview with Intelligence and Donald Trump, Jr.'s e-mails, among others, that contrary to your 27 earlier testimony there were continued efforts to communicate with the Russians on behalf of the 28 Trump campaign. Document ID: 0.7.15798.13233-000001 20180509-0000787 DOJ-17-0214-C-000068 AMERICAN PVERSIGHT 764 1 We've established that you knew about at least some of these efforts, they caused you such 2 concern that you quote, "shut George down". I want to know what you did with this information. 3 Yes or no. After the March 31st meeting, did you take any steps to prevent Trump campaign 4 officials, advisers or employees from further outreach to the Russians? 5 6 SESSIONS: 7 Mr. Nadler, let me just say it this way, I pushed back at that. You made statements that he did in 8 fact -- at the meeting I pushed back... 9 10 NADLER: 11 We know that, but did you after the meeting... 12 13 SESSIONS: 14 No, I'm not. I have to be able to answer. I can't -- I can't be able to put into a position where I 15 can't explain. 16 17 NADLER: 18 I only have five minutes. I'm asking you... 19 20 SESSIONS: 21 I'm not going to be able to answer if I can't answer completely. 22 23 NADLER: 24 Well, you said you pushed back, we accept that. After the meeting, did you take any further steps 25 to prevent Trump campaign officials, advisers or employees form further outreach the Russians 26 after you stop it or push back at that meeting? Document ID: 0.7.15798.13233-000001 20180509-0000788 DOJ-17-0214-C-000069 AMERICAN PVERSIGHT 765 1 2 SESSIONS: 3 What I want to say to you is, you alleged there was some further contacts later. I don't believe I 4 had any knowledge of any further contacts and I was not in regular contact with Mr. 5 Papadopoulos. 6 7 NADLER: 8 So your answer is no because you don't think there were any such contacts. So... 9 10 SESSIONS: 11 I'm not aware of it. 12 13 NADLER: 14 OK. So I was going ask you a question of did you raise the issue with various people but your 15 answer is no. 16 17 SESSIONS: 18 To the best of my recollection. 19 20 NADLER: 21 OK. So, your testimony today is that you communicated with nobody in the campaign about this 22 matter after the March 31st meeting because nothing happened. 23 24 SESSIONS: 25 Repeat that. 26 27 NADLER: Document ID: 0.7.15798.13233-000001 20180509-0000789 DOJ-17-0214-C-000070 AMERICAN PVERSIGHT 766 1 Your testimony, therefore, is that you communicated with nobody in the campaign about this 2 matter after the March 31st meeting. 3 4 SESSIONS: 5 I don't recall it. 6 7 NADLER: 8 You don't recall. At some point, you became aware that the FBI was investigating potential links 9 between the Trump campaign and the Russian government. After you became aware of the 10 investigation, did you ever discuss Mr. Papadopoulos's effort with anybody at the FBI? 11 12 SESSIONS: 13 Did I discuss the matter with the FBI? 14 15 NADLER: 16 Yes. 17 18 SESSIONS: 19 ...to ask them questions about what they may have found? 20 21 NADLER: 22 Did you discuss the Papadopoulos question with the FBI? 23 24 SESSIONS: 25 I have not had any discussions with Mr. Mueller or his team or the FBI concerning any factors 26 with regard to this investigation. Document ID: 0.7.15798.13233-000001 20180509-0000790 DOJ-17-0214-C-000071 AMERICAN PVERSIGHT 767 1 2 NADLER: 3 Nobody else at the FBI either? 4 5 SESSIONS: 6 No. 7 8 NADLER: 9 And, at the Department of Justice? 10 11 SESSIONS: 12 No. 13 14 NADLER: 15 At the White House? 16 17 SESSIONS: 18 No. 19 20 NADLER: 21 Any member of Congress? 22 23 SESSIONS: 24 Well, I don't know if these conversations may have come up at some time, but not to obtain 25 information in any... 26 27 NADLER: Document ID: 0.7.15798.13233-000001 20180509-0000791 DOJ-17-0214-C-000072 AMERICAN PVERSIGHT 768 1 OK. 2 3 SESSIONS: 4 With regard to your broad question, I don't recall, at this moment, sitting here any such 5 discussion. It's important for me to say that. 6 7 NADLER: 8 I have one more ... 9 10 GOODLATTE: 11 The time of the gentlemen has expired. We've got a lot of people waiting to ask questions. And 12 the chair recognizes the gentlemen from Ohio, Mr. Chabot, for five minutes. 13 14 CHABOT: 15 Thank you, Mr. Chairman. 16 Mr. Attorney General, does your recusal from investigations related to the interference by Russia 17 in the 2016 presidential campaign apply to any investigations regarding efforts by the 18 Democratic National Committee and the Clinton campaign to secretly fund a scurrilous and 19 widely discredit that dossier on candidate Donald Trump. 20 21 SESSIONS: 22 Mr. Chairman, anything that arises in this nature, that may be or may not be connected to the -- 23 my recusal on the question of the campaign and Russia would be discussed between me, the 24 senior ethics adviser at the Department of Justice and that's how I make my decision. That's what 25 I promised to do when I was confirmed before the Senate Judiciary Committee, and that's what I 26 will do and I'm unable to provide information to you as to what decision would be -- has been 27 made in this matter. Document ID: 0.7.15798.13233-000001 20180509-0000792 DOJ-17-0214-C-000073 AMERICAN PVERSIGHT 769 1 2 CHABOT: 3 Great, thank you very much. I'm not and never was a prosecutor, but I did some criminal defense 4 work back in the day when I practiced law for almost 20 years. It seems to me that a presidential 5 campaign using a law firm as a conduit to pay for activities with which the campaign itself 6 doesn't want to be directly associated is more than just dirty politics, it's also quite possibly 7 illegal. 8 To me, it seems that this is at least a violation of campaign finance laws for failure to accurately 9 disclose the actual recipients of campaign disbursements. However, this type of arrangement is 10 not illegal, if it's not illegal under current law. I fear that we're risking opening Pandora's box 11 with all sorts of underhanded activities by campaigns being laundered through law firms and 12 shielded under attorney-client privilege. 13 As the chief law enforcement official in this country, do you share similar concerns, and in your 14 opinion, is it legal under current law for a presidential campaign to hide its funding of the 15 compilation and dissemination of political dirt on its opponent by using a law firm to directly pay 16 for the work? 17 18 SESSIONS: 19 I would think that those matters are worthy of consideration, but as to the details of them and for 20 me to express an ultimate comment today, I'm unable to do so. 21 22 CHABOT: 23 OK, thank you. Let me shift over to something entirely different. Federal law currently still cites 24 marijuana as a dangerous drug, it's still prohibited, still illegal under Federal law, yet a number of 25 states have -- for both medical purposes and now even for recreational purposes have basically 26 made it legal. What is your Department's policy on that relative to enforcing the law? 27 28 SESSION: Document ID: 0.7.15798.13233-000001 20180509-0000793 DOJ-17-0214-C-000074 AMERICAN PVERSIGHT 770 1 Our policy is that the same, really, fundamentally, as the Holder-Lynch policy, which is that the 2 Federal law remains in effect and a state can legalize marijuana for its law enforcement purposes, 3 but it still remains illegal with regard to Federal purposes. 4 5 CHABOT: 6 OK, it seems to me that there's always been a tremendous amount of gray area in that whole 7 field, which I think, as a nation, we need to look much more closely at both from the states point 8 of view in the Federal Government point of view, but that's just my feeling on that. 9 Running out of time, I had about four other things but let me just go to one final thing here. 10 11 12 CHABOT: 13 I've been very involved in the area victims' rights I was the -- following Henry Hyde's leadership 14 on this, introduced the Victims' Rights Constitutional Amendment years back, various pieces of 15 legislation on victims' rights and I've also worked closely with the parents of murdered children 16 and when you talk about something that affects one's family, there's nothing that effects family 17 more adversely than something like that happening. 18 And we still have a capital punishment on the books, both at the federal level and many of our 19 states. Yet these families are dragged left and right, up and down, back and forth, into hearing 20 after hearing. These cases can drag on for more than 20 years before the imposition of capital 21 punishment actually occurs. In many instances, obviously, it it never does. 22 And while these people are behind bars, oftentimes they attack, sometimes kill guards, attack, 23 sometimes kill other inmates. So what -- what is -- I'd be interested to see, what is -- what is your 24 -- what is your intentions relative to capital punishment in this country? 25 26 SESSIONS: 27 Well, many states have capital punishment, the federal government has capital punishment for a 28 number of offenses and is specifically controlled. We have, within the Department, a Document ID: 0.7.15798.13233-000001 20180509-0000794 DOJ-17-0214-C-000075 AMERICAN PVERSIGHT 771 1 recommendation process through our appointed committee to seek or not seek a death penalty 2 when a case is charged. Sometimes it's a complex thing, but I believe the death penalty -- the 3 federal death penalty is a part of our law. I think it's a legitimate penalty. It's constitutional and 4 we will do our duty, even in those circumstances that require the imposition of the death penalty. 5 6 CHABOT: 7 Thank you very much my time's expired. 8 9 GOODLATTE: 10 The Chair recognizes the gentleman from California, Ms. Lofgren, for five minutes. 11 12 LOFGREN: 13 Thank you, Mr. Chairman and thank you Mr. Attorney General for being here today. 14 Former National Security Adviser, Michael Flynn is under investigation because of his work and 15 ties to foreign governments. According to various reports, much of his work with these foreign 16 governments went unreported when Mr. Flynn was required to make certain disclosures by law. 17 Now, as chairman of the Trump campaign, National Security Adviser Committee and lead 18 adviser on the Trump transition team, I think you worked closely with Mr. Flynn. And I'd like 19 you to answer a few yes or no questions about Mr. Flynn. And knowing that Mr. Flynn is under 20 investigation, I'm going to stick to subject matter that predates both the special counsel's 21 investigation and your appointment as Attorney General. 22 Now, the foreign policy platform at the Republican National Convention undertook dramatic 23 changes. Did you discuss changes to the Republican foreign policy platform with Mr. Flynn at 24 any point during the campaign? 25 26 SESSIONS: 27 I don't recall it. I was not at the convention when the platform committee met. Document ID: 0.7.15798.13233-000001 20180509-0000795 DOJ-17-0214-C-000076 AMERICAN PVERSIGHT 772 1 2 LOFGREN: 3 You -- you are the lead of the campaign, but you don't recall discussing it with him? 4 5 SESSIONS: 6 Well that may be a bit of a stretch. I was asked to lead, inform, and find some people who would 7 join and meet with Mr. Trump to give him advice and support regarding foreign policy. And I 8 did so, although we were not a very effective group really. 9 10 LOFGREN: 11 You met with Ambassador Kislyak in November of 2016. Did you discuss your meetings with 12 Ambassador Kislyak with Mr. Flynn? 13 14 SESSIONS: 15 Did I discuss Mr. Flynn with him? 16 17 LOFGREN: 18 Did you discuss your meeting with the Ambassador with Mr. Flynn? 19 20 SESSIONS: 21 No, the Ambassador -- I met with I think some 25 ambassadors that year. I did meet once in my 22 office with Mr. Kislyak and I do not recall and don't believe I communicated any of that 23 information to Mr. Flynn. 24 25 LOFGREN: 26 Are you aware of any meetings between Ambassador Kislyak and Mr. Flynn that might've 27 occurred around the time of your meeting with the ambassador? Document ID: 0.7.15798.13233-000001 20180509-0000796 DOJ-17-0214-C-000077 AMERICAN PVERSIGHT 773 1 2 SESSIONS: 3 I do not. 4 5 LOFGREN: 6 OK. In her testimony before the Senate in May, former acting Attorney General, Sally Yates, 7 testified that one week into the Trump administration she notified the administration that Mr. 8 Flynn had lied to Vice President Pence about discussing sanctions with Ambassador Kislyak. As 9 part of the transition team and the president's pick for attorney general, in January, were you 10 notified when the Administration was notified of Mr. Flynn's lie and his susceptibility to Russian 11 blackmail? 12 13 SESSIONS: 14 I don't believe so. 15 16 LOFGREN: 17 All right. We now know that you were aware of the efforts of Carter Page and George 18 Papadopoulos to meet and establish communications with the Russian government. Did you, at 19 any point... 20 21 SESSIONS: 22 Well, not necessarily so, about -- at lease from what Mr. Carter Page says and I don't recall that. 23 24 LOFGREN: 25 All right. Did you at any point discussed with Michael Flynn, the possibility of then-candidate 26 Trump or his surrogates meeting with the Russian government? 27 28 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000797 DOJ-17-0214-C-000078 AMERICAN PVERSIGHT 774 1 I do not recall such a conversation. 2 3 LOFGREN: 4 Did you know that Flynn was working for the Turkish government while acting as a surrogate 5 for the Trump campaign? 6 7 SESSIONS: 8 I don't believe I had information to that effect. 9 10 LOFGREN: 11 Did you know that he was working for the Turkish government at any point after the election? 12 13 SESSION: 14 I don't believe so. 15 16 LOFGREN: 17 Were you or anyone on the Trump campaign aware of Mr. Flynn's efforts to extradite Turkish 18 Cleric Gulen? 19 20 SESSIONS: 21 I've read that in the paper recently, but I don't recall ever being made aware of that before this 22 recent release of the paper. 23 24 LOFGREN: 25 So you just read about it in the newspaper afterwards? After the inauguration, you did not know 26 that the FBI was requested to conduct a new review of Turkey's 2016 extradition request for Mr. 27 Gulen? Document ID: 0.7.15798.13233-000001 20180509-0000798 DOJ-17-0214-C-000079 AMERICAN PVERSIGHT 775 1 2 SESSIONS: 3 The FBI was... 4 5 LOFGREN: 6 Did you know about that? 7 8 SESSIONS: 9 I'm aware that the Turkish government continued to press the Federal Government with regard to 10 seeking the return of Mr. Gulen to Turkey. 11 12 LOFGREN: 13 Did you know... 14 15 SESSIONS: 16 And our Department had a role to play in that, although I'm not at liberty to discuss the details of 17 that. 18 19 LOFGREN: 20 Did you know that the Turkish government allegedly offered $15 million for Mr. Flynn to kidnap 21 Mr. Gulen? 22 23 SESSIONS: 24 Absolutely not. You mean -- no. 25 26 LOFGREN: 27 On... Document ID: 0.7.15798.13233-000001 20180509-0000799 DOJ-17-0214-C-000080 AMERICAN PVERSIGHT 776 1 2 GOODLATTE: 3 Time of the gentlewoman has expired. 4 The Chair recognizes the gentleman from Iowa, Mr. King, for five minutes. 5 6 KING: 7 Thank you, Mr. Chairman and thank you General Sessions for your testimony here today and 8 your service to our country over the years that you have been front and center. 9 And I -- a number things I wanted to discuss. One of them is that the DACA situation and it 10 seems, as I recall, that you had made a public statement sometime back about the 11 constitutionality of the policy that was implemented by President Obama. Would you care to 12 reiterate position today? 13 14 SESSIONS: 15 Well, the president, you know, President Obama, indicated multiple times that he felt that DACA 16 -- he didn't have the power to do DACA in the way it was done and eventually they must've 17 changed their mind and executed this policy to take persons who were in the country, unlawfully, 18 and give them lawful status, work permits and even participation in Social Security. 19 So I felt, for some time, that that was not proper. A Federal District Court in Texas so held, and 20 the fifth circuit court of appeals also so held, that it was in unlawful. So, what happened was, we 21 helped work on the research but the department of homeland security withdrew the policy 22 because it was not defenseable, in my view. 23 24 KING: 25 And established a date to close it down on March 5th, I think, of next year? 26 27 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000800 DOJ-17-0214-C-000081 AMERICAN PVERSIGHT 777 1 That's right. The homeland security asked for time to wind this program down. And I thought 2 that was appropriate. 3 4 KING: 5 And there's a lot of public dialogue about what kind of legislation might be passed in -- in 6 conjunction with a DACA policy. And that's up in the air right now, I'm noticing the Democrats 7 are saying we're going to have everything we want on DACA, we'll shut the government down. 8 It causes me to think about what should happen, if Congress reaches an impass and there is no 9 passage of any legislation to extend the DACA policy. If the president should decide on or 10 before that March 5th date, around that period of time that he wants to extend the Dover policy, 11 what would your position be at that time? 12 13 SESSIONS: 14 Well, as hypothetical, Senator King, I'm not -- I don't think I should speculate on that but I do 15 think Congress will have to give it thought. We have a law now, it's in place as Congress passed, 16 and Congress would have to change it. 17 18 KING: 19 And, I would just remark that I'm watching a lot of people be rewarded for violation of the rule 20 of law, and I appreciate your emphasis on rule of law on your -- in your testimony today multiple 21 times coming back to that point. 22 23 SESSIONS: 24 Mr. King, I would just say, it is correct, in my view, and I think you probably share it, that 25 something is lost whenever you provide an amnesty. It's a price will be paid if that's done, but 26 sometimes circumstances are such it may need to be done. But we need to be careful. 27 28 KING: Document ID: 0.7.15798.13233-000001 20180509-0000801 DOJ-17-0214-C-000082 AMERICAN PVERSIGHT 778 1 Thank you, and it's been -- we've been made aware here in this committee that there's a 2 significant back log in immigration cases. Have you presented any request to Congress or -- a 3 statement that could inform as to how many resources you might need? How many judges you 4 might need to get this back log caught up? And then an idea of how many we might need to 5 maintain an anticipated level? 6 7 SESSIONS: 8 That's a very good question. Yes, we've worked on it. We have some preliminary information. 9 We're seeking a total of about 360 -- 70 judges. We've added about 50 to the total. We've 10 shortened the time process for selecting people, not shorting the training program. And we'll -- 11 we're adding judges. 12 I would say, on the backlog has gone up dramatically. It's now over 600,000. But the last two or 13 three months, we're almost not adding to the backlog. And I'm told, by the additional work we're 14 doing, by January, we will not be adding to the backlog, but hopefully reducing it. That would be 15 a real change in the trends that we were heading on. 16 17 KING: 18 Well, thank you, and then I'd just ask you to reflect as this committee anticipates the potential of 19 a special counsel to broaden this look that I think is forced upon us, in reluctant way. But I 20 certainly support this special counsel, to look back at some times here, that I believe should be 21 incorporated into this. And that is, I look back at October 16th, 2015, when Barack Obama was 22 speaking of Hilary Clinton, and whether she -- whether she might have violated any -- any 23 security clauses in our statue. In particular, 18 USC 793, when he said that he had no impression 24 that Mrs. Clinton had purposely tried to hide something. Or to squirrel away any information. 25 26 27 KING: 28 Made the point of intent, behind that in April after that -- April 10th, a similar statement she 29 would never -- meaning Hillary Clinton, "She would never intentionally put America in any kind Document ID: 0.7.15798.13233-000001 20180509-0000802 DOJ-17-0214-C-000083 AMERICAN PVERSIGHT 779 1 of jeopardy." Those words of intent caught my attention when I heard James Comey use that 2 very word July 5th of 2016 and it seems as though he latched onto the statements made by 3 President Obama and he more or less implied, and implemented it into an interpretation of the 4 statute, that word, intent, as if it were a condition before there could be any prosecution for a 5 violation of 18 USC 793. 6 And I -- I don't know that I have a question on that, I want to make sure that I put that into the 7 record so that it's under consideration by the DOJ. 8 9 GOODLATTE: 10 Time of the gentleman -- time of the gentleman has expired. 11 Chair recognizes the gentlewoman from Texas, Ms. Jackson Lee, for five minutes. 12 13 JACKSON LEE: 14 I thank you very much. 15 Mr. General, do you believe in this book, the Constitution of the United States? 16 17 SESSIONS: 18 Yes. 19 20 JACKSON LEE: 21 And will abide by it with all of your intentions? 22 23 SESSIONS: 24 That's exactly correct. 25 26 JACKSON LEE: Document ID: 0.7.15798.13233-000001 20180509-0000803 DOJ-17-0214-C-000084 AMERICAN PVERSIGHT 780 1 I -- I thank you so very much. I took the liberty of reviewing federal crimes against children, 2 particularly those dealing with sexual or physical abuse. As you well know, Leigh Corfman, 3 Wendy Miller, Debbie Wesson Gibson, Gloria Thacker Deason and Beverly Young Nelson; 4 these young women have accused this individual, Judge Moore, who is running for a federal 5 office, the United States Senate, of child sexual activity. 6 Do you believe these young women? 7 8 SESSIONS: 9 I am -- have no reason to doubt these young women. 10 11 JACKSON LEE: 12 And with that in mind, if you believe these young women, do you believe Judge Moore should 13 be seated in the Senate, if he wins? And would you introduce investigations by the DOJ 14 regarding his actions? 15 16 SESSIONS: 17 We will evaluate every case as to whether or not it should be investigated. This kind of case 18 would normally be a state case. I would say, Representative Jackson Lee, that the ethics people 19 at the Department of Justice, and I've talked to them about that when this campaign started, it's 20 the seat I used to hold. They advised me that the attorney general should not be involved in this 21 campaign. 22 I have friends in the campaign... 23 24 JACKSON LEE: 25 Thank you, Mr. General. I have a short period of time... 26 27 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000804 DOJ-17-0214-C-000085 AMERICAN PVERSIGHT 781 1 I have steadfastly adhered to that view... 2 3 JACKSON LEE: 4 I want to make sure that if he comes to the United States Senate... 5 6 SESSIONS: 7 ...and I think I should continue to do so. 8 9 JACKSON LEE: 10 ...if he comes to the United States Senate, that there would be the possibility of referring his case 11 for at least a federal review by the Department of Justice. 12 13 SESSIONS: 14 We will do our duty. 15 16 JACKSON LEE: 17 Let me also refer you back to the meeting on March 31st, 2016, with Mr. Papadopoulos. You 18 well know that Mr. Papadopoulos, in addition to his comments in the meeting regarding a 19 meeting between Trump and Mr. Putin, had series of meetings dealing with -- and as you can see 20 Trump, Mr. Papadopoulos and you leading that committee, I cannot imagine your memory 21 would fail you so much. 22 But moving on, he was in that meeting, but you also had Stephen Miller, who was a senior policy 23 adviser, who was noted in the stipulated statement of events, to receive conversations from Mr. 24 Papadopoulos about his constant interaction with the Russians to intrude in the 2016 election. 25 You continued in the October 18th meeting before the Judiciary Committee, or hearing, in the 26 Senate, to not answer the question. Document ID: 0.7.15798.13233-000001 20180509-0000805 DOJ-17-0214-C-000086 AMERICAN PVERSIGHT 782 1 Now, in light of the facts that are now part of the record, do you wish to change your testimony 2 before the Senate Intelligence Committee on June 13, 2017, where you said "I have never met 3 with or had any conversation with any Russians or any foreign officials." Let me jump to the 4 final part, "I have no knowledge -- I have no knowledge of any such conversations by anyone 5 connected to the Trump campaign." 6 Do you want to admit under oath that you did not tell the truth or misrepresented it? Or do you 7 want to correct your testimony right now? 8 9 SESSIONS: 10 You're referring to my testimony at confirmations? 11 12 JACKSON LEE: 13 Before the Senate intelligence committee. My time is short and I have two more questions, 14 please. 15 16 SESSIONS: 17 Well, I'm not able to respond because I don't think I understand what you are saying. 18 19 JACKSON LEE: 20 I'm asking your Intelligence Committee testimony, do you want to change it where you indicated 21 you had no knowledge of involvement of the Trump individuals involved in conversations 22 regarding the Trump campaign Russians. And Mr. Miller gave -- supported Mr. Trump's press 23 conference where he said, "Russia, if you're listening I hope you will be able to find the 30,000 24 e-mails." 25 Do you want to change your testimony that was -- where you said, I have no knowledge of any 26 such conversation by anyone connected to the Trump campaign regarding Russians involved in 27 the campaign. That was a testimony on June 13th. Document ID: 0.7.15798.13233-000001 20180509-0000806 DOJ-17-0214-C-000087 AMERICAN PVERSIGHT 783 1 2 SESSIONS: 3 I'm not able to understand... 4 5 JACKSON LEE: 6 All right. Let me move forward to the (inaudible)... 7 8 SESSIONS: 9 Let me say this, Mr. Chairman. Could I (inaudible)... 10 (CROSSTALK) 11 12 JACKSON LEE: 13 The black identity. 14 15 GOODLATTE: 16 ... the witness will be allowed to answer the question. 17 18 JACKSON LEE: 19 Let me move to a document that you have prepared. 20 The gentleman keeps saying he cannot recall, he cannot recall. So I'm reclaiming my time. 21 22 GOODLATTE: 23 The gentlewoman will suspend. The witness wants to answer the question she asked and 24 (inaudible)... 25 (CROSSTALK) Document ID: 0.7.15798.13233-000001 20180509-0000807 DOJ-17-0214-C-000088 AMERICAN PVERSIGHT 784 1 2 JACKSON LEE: 3 Then I should be given extra time and I do not have extra time. Let me move with the black 4 (inaudible)... GOODLATTE: The gentlewoman will suspend. 5 6 JACKSON LEE: 7 I will suspend. 8 9 GOODLATTE: 10 The witness will answer the question. 11 12 JACKSON LEE: 13 Yes or no? Does he want to change his testimony in the Intelligence Committee? 14 15 SESSIONS: 16 I would just say this; I stand by this testimony at the Intelligence Committee. I have never met 17 with or had any conversation with any Russians or any foreign officials concerning any type of 18 interference with the campaign or election in the United States. 19 Further, I have no knowledge of any such conversations by anyone connected to the Trump 20 campaign. 21 22 JACKSON LEE: 23 Thank you very much for that. 24 25 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000808 DOJ-17-0214-C-000089 AMERICAN PVERSIGHT 785 1 Now, what I did say in my opening statement, I explained that when I was asked in October, just 2 a few weeks ago, and I was asked about the matter, did I have any knowledge of anyone who had 3 talked to the Russians, I indicated that I had not recalled that meeting when that occurred. 4 But I would've been pleased to have responded and explained it if I'd recalled it. I've tried to be 5 honest about that, and give you my best response and did throughout all the testimony I've given, 6 Ms. Lee. 7 8 JACKSON LEE: 9 You stand by your testimony. Thank you very much. 10 Are you familiar with the names Eric Garner, Walter Scott, Tamir Rice? My question is, as I 11 hold up the poster dealing with the report under your jurisdiction, Black Identity Extremists. It is 12 interesting to me that you are opposing individuals who are posing lethal force, similar to the 13 attack on Reverend Dr. Martin Luther King on COINTELPRO, but there seems to be no report 14 dealing with the Tiki torch parade in Charlottesville, chanting, "Jews will not replace us." 15 Why is there an attack on black activists versus any reports dealing with the Alt-right and the 16 white nationalists? Can you answer that question quickly? 17 18 SESSIONS: 19 I'm not aware... 20 21 JACKSON LEE: 22 Are you planning on investigating that? 23 24 SESSIONS: 25 When was that report completed? 26 27 JACKSON LEE: Document ID: 0.7.15798.13233-000001 20180509-0000809 DOJ-17-0214-C-000090 AMERICAN PVERSIGHT 786 1 In August of 2017. 2 3 SESSIONS: 4 I'm not aware -- I have not studied that report... 5 6 JACKSON LEE: 7 I ask you to because it's an attack on individuals who are simply trying to petition the 8 government in a redress of grievances. 9 Let me move to criminal justice reform. We have found that mandatory minimums and over￾10 incarceration has been the history of criminal justice. We were moving toward criminal justice 11 reform which you opposed, as a United States Senator. And now you intend to return toward 12 discredited Nixon-era law and order criminal justice policies, going to make America great or 13 not -- or waste precious taxpayer dollars. 14 Do you have any interest in rehabilitating those incarcerated, recognizing that mandatory 15 minimums created the opportunity for over- incarceration rather than telling your prosecutors to 16 prosecute on every single crime? 17 Is there any opportunity to work with your office to deal with progressive ways of dealing with 18 criminal justice reform at this time? Yes or no? 19 20 SESSIONS: 21 Yes. 22 23 JACKSON LEE: 24 All right. 25 26 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000810 DOJ-17-0214-C-000091 AMERICAN PVERSIGHT 787 1 I would just respond and say that Senator Durbin and I worked together to reduce the crack 2 cocaine penalties some years ago. It probably remains the largest single... 3 4 JACKSON LEE: 5 Well, will you pull back on... 6 7 GOODLATTE: 8 The time -- the time of the gentlewoman has expired. 9 10 JACKSON LEE: 11 Will you pull back on your opposition of mandatory minimums? (ph) 12 13 GOODLATTE: 14 The witness is allowed to answer the last question. 15 16 SESSIONS: 17 I'm sorry. 18 19 GOODLATTE: 20 Time of the gentlewoman has expired. The Chair recognizes the gentleman from California, Mr. 21 Issa, for five minute. 22 23 ISSA: 24 Thank you, Mr. Chairman. 25 General Sessions, it's -- it's good to see you again. Document ID: 0.7.15798.13233-000001 20180509-0000811 DOJ-17-0214-C-000092 AMERICAN PVERSIGHT 788 1 2 SESSIONS: 3 Yes, sir. 4 5 ISSA: 6 I -- I don't speak Russian and I don't meet with -- with Russians and I don't really want to ask 7 about those questions today. But I do have some very important questions... 8 9 SESSIONS: 10 Well, Congressman Issa, you said that, but I bet you have met with some Russian and if you -- in 11 your lifetime and taking those words at face value, somebody might accuse you of not being 12 honest. And that's what they've done to me. 13 14 ISSA: 15 You're absolutely -- you're absolutely right, General Sessions, that -- that that is the challenge, is 16 that as a member of the Foreign Affairs Committee, I meet with lots of ambassadors and I don't 17 want to try to remember every one and everything that was discussed in what I thought was a pro 18 forma meeting. 19 But there are a couple of areas that are left over from the previous administration that I'd like to 20 talk to you about. One of them is we sent Loretta Lynch, General Lynch, a letter related to sober 21 homes and a predicament. And the predicament is fairly straightforward. If -- and her answer, to 22 be honest, to Chairman Goodlatte and the rest of us was not satisfactory and we've given your 23 staff a copy of it. 24 Essentially, sober living homes are nothing but boarding houses. They're required to provide no 25 care whatsoever to the alcoholic or recovering drug abuser because that has to be done 26 somewhere else or they don't qualify as sober homes. Document ID: 0.7.15798.13233-000001 20180509-0000812 DOJ-17-0214-C-000093 AMERICAN PVERSIGHT 789 1 And yet, currently, there is a -- in the ninth circuit, decisions that cause cities to be unable to 2 regulate them in a way that would prevent people from simply buying houses in a row in a very 3 prestigious neighborhood and turning them into these, if you will, sober living homes. 4 Which are, again, boarding houses with 15 or more people. Will you agree to work with us to try 5 to find an appropriate way to align your enforcement of the Americans with Disability Act and 6 your enforcement of the Fair Housing Act with the necessity for cities to be able to, essentially, 7 regulate who -- how many people live in a home? 8 9 SESSIONS: 10 Yes. I would be pleased to do that. These are important act -- issues because a lot of money is 11 being spent and some of it not wisely in these areas. 12 13 ISSA: 14 A lot of it is federal dollars being squandered to the benefit of people that are speculating. The 15 second one is, in a trial court ruling in the Duarte Nursery versus the American -- the Army 16 Corps of Engineers case. Are you even familiar with this case? 17 18 SESSIONS: 19 I'm not. 20 21 ISSA: 22 Well, I'd like you to become familiar, because during your administration, an Assistant U.S. 23 Attorney on your behalf argued that the waters of the U.S., which is not a valid regulation 24 delivered to Congress and eligible under CRA to be considered or rejected, continued to argue 25 that that was law. 26 Would you agree that your attorneys, on your behalf, should not argue regulations which have 27 not been delivered to Congress and as a result, are not eligible for CRA review? Document ID: 0.7.15798.13233-000001 20180509-0000813 DOJ-17-0214-C-000094 AMERICAN PVERSIGHT 790 1 2 SESSIONS: 3 Mr. Issa, I have -- now recall the case. I didn't recall it by name. That matter was intensely 4 reviewed by a new Assistant Attorney General for the acting-police for the Environment and 5 Natural Resources Division. After great consideration, we felt -- it was advised to me and I 6 approved going forward with that position in court. So I will take responsibility for it. 7 But I got to tell you, we did look at it very hard. 8 9 ISSA: 10 But in general, you would agree that if a regulation is created or some other words of the 11 Executive Branch, they don't have the weight of law, unless they're delivered to Congress so we 12 have an opportunity to review them under the Congressional Review Act? 13 14 SESSIONS: 15 That would sound correct. 16 17 ISSA: 18 Thank you. My last question is less of a soft ball, and neither one of these were soft ball, they're 19 very important to California. But in a previous Congress, the Ways and Means Committee of the 20 United States House voted for and referred criminal charges against Lois Lerner. I also was 21 involved investigating her wrongful activity. 22 They referred criminal charges, and they did so under a statute that says and I'll paraphrase it as 23 well as I can, that the U.S. Attorney for the District of Columbia shall present to the Grand Jury 24 the following, and then they laid out the criminal charges. The previous Attorney General 25 ordered the U.S. Attorney, or U.S. Attorney in District, made a decision not to enforce that. Now, 26 the statute, as we understand it, is not a statute that says you will look at this and decide 27 independently. It actually says it shall be presented to the Grand Jury. Document ID: 0.7.15798.13233-000001 20180509-0000814 DOJ-17-0214-C-000095 AMERICAN PVERSIGHT 791 1 Will you commit to review that? And if you agree with us as to what the statute says, and we 2 think it's pretty plain English, order a U.S. Attorney to present to a Grand Jury, and if they no bill 3 it, fine, but in fact, present it consistent with Congressional and statutory law? 4 5 SESSIONS: 6 I'll review that more personally. But the Department of Justice view has been, it takes a full vote 7 of the House on to accomplish that Act. And I'm not sure where that leaves us, but I will give it a 8 personal review, which I have not done at this point. 9 10 ISSA: 11 Mr. Chairman, if you can stop the clock for just one second. 12 13 GOODLATTE: 14 I -- I -- no. 15 16 ISSA: 17 If the entire House voted to... 18 19 GOODLATTE: 20 The time of the gentlemen... 21 22 ISSA: 23 Go after the U.S. Attorney... 24 25 GOODLATTE: 26 The time of the gentleman has expired. 27 The Chair recognizes the gentleman from Tennessee, Mr. Cohen, for five minutes. Document ID: 0.7.15798.13233-000001 20180509-0000815 DOJ-17-0214-C-000096 AMERICAN PVERSIGHT 792 1 2 COHEN: 3 Thank you, sir. 4 Mr. Attorney General, first, I noted you went to the 50th Anniversary of the Selma, Alabama 5 March, in Montgomery. 6 7 SESSIONS: 8 Yes. 9 10 COHEN: 11 I want to commend you for that. And you were a sponsor of the gold medal for those folks that 12 marched. Having done that, I would like to ask you what have you done as Attorney General, to 13 see to it that African-Americans and others who been discriminated for years in voting have 14 more access to the ballot box? 15 16 SESSIONS: 17 We will absolutely resolutely defend the right of all Americans to vote, including our African￾18 American brothers and sisters. It cannot ever be suggested that people are blocked from voting. 19 And we have done a number of things in the Department of Justice. 20 21 COHEN: 22 Let me ask you this, Mr. Attorney General, it's a fact -- there have been studies that show that 23 voter ID is more discriminatory, in its effect on African-Americans and Latinos, than anything 24 else. Will you stop defending voter ID law cases? 25 26 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000816 DOJ-17-0214-C-000097 AMERICAN PVERSIGHT 793 1 No. The Supreme Court has approved voter ID, if properly done, other courts have too. It can be 2 done in a discriminatory way, which is not proper and should not be approved. But I believe it's 3 settled law that it -- that a properly handled and written voter ID law is lawful. 4 5 COHEN: 6 Let me suggest, sir, with all due respect, we come from a similar region. I think we have a 7 greater responsibility than anybody else in this country, to see to it that African-Americans get a 8 chance at the ballot. When they were discriminated against, they were slaves for 200 and plus 9 years, they were under Jim Crow, they weren't allowed to vote, and they're still been discriminate 10 against. And I would submit to you and ask you to look at voter ID laws, access to the ballot, 11 Election Day voting, early voting and other indices that would allow people to vote that have 12 been stopped. 13 Secondly, on marijuana, you said that that you are basically doing the same as Holder and 14 Lynch. I believe General Holder and General Lynch abided by congressional appropriations that 15 limited the Justice Department in enforcing marijuana laws where states had passed laws on 16 medical marijuana and others. 17 Are you -- will you abide by congressional appropriations, limitations on marijuana when it can 18 conflict with state laws? 19 20 SESSIONS: 21 I believe we are bound by that. 22 23 COHEN: 24 Thank you, sir. That's -- that's great. And I saw you -- what you did on crack-cocaine was good, 25 it wasn't as good as it could've been. Your proposal was a 20 to one ratio, and Mr. Durbin's was a 26 ten to one ratio, you all decided on 18 to one, you were a good negotiator, like Mr. Durbin took 27 what he could get. Document ID: 0.7.15798.13233-000001 20180509-0000817 DOJ-17-0214-C-000098 AMERICAN PVERSIGHT 794 1 But it should've been one to one. But you admitted in that hearing that it could discriminate 2 against the disparity against African Americans and minorities, and you ought to look at that. 3 4 SESSIONS: 5 Well, I would just say that the net effect of that legislation was to significantly... 6 7 COHEN: 8 It was good, sir. 9 10 SESSIONS: 11 ...reduce the penalty one is subjected to for -- on dealing with crack-cocaine. 12 13 COHEN: 14 Yes sir, and that was good. 15 16 SESSIONS: 17 That may be a better analysis than the 18 to one, or whatever it is. It's generally considered a 18 more dangerous drug. 19 20 COHEN: 21 Marijuana is not as dangerous as heroin, would you agree with that? 22 23 SESSIONS: 24 I think that's correct. 25 26 COHEN: Document ID: 0.7.15798.13233-000001 20180509-0000818 DOJ-17-0214-C-000099 AMERICAN PVERSIGHT 795 1 Well, thank you sir. I would hope that in your enforcement that you would look at the limitations 2 you've got. There's always an opportunity cost, and put your opportunity cost your enforcement 3 on mari -- on crack, on cocaine, on meth, on opioids, and on heroin. 4 Marijuana is the least bothersome of all. Twenty eight states or 29 states and the District of 5 Columbia have legalized it for medical purposes, 8 states and the District of Columbia for 6 recreational purposes. 7 Justice Brandeis famously said that the states are the laboratories of democracy. I would hope 8 you'd look at marijuana and look at the states as laboratories of democracy and see how they've 9 helped. 10 In states where they've got medical marijuana, they have 25 percent less opioid use. It gives 11 people a way to relieve pain without using opioids, which, inevitably, leads to death and crime. 12 And so I would hope you'd take a look at that. 13 14 SESSIONS: 15 We will take a look at it, and we'll be looking at some rigorous analysis of the marijuana usage 16 and how it plays out. I'm not as optimistic as you. 17 18 COHEN: 19 You said one time that good people don't smoke marijuana. Which of these people, you'd say, are 20 not good people? 21 22 SESSIONS: 23 Well, let me answer -- explain how that occurred. 24 25 COHEN: 26 All right. Quickly. Document ID: 0.7.15798.13233-000001 20180509-0000819 DOJ-17-0214-C-000100 AMERICAN PVERSIGHT 796 1 2 SESSIONS: 3 I talked about -- 4 5 COHEN: 6 Is John Kasich a good person? George Pataki, Rick Santorum, Newt Gingrich, Ted Cruz, Jeb 7 Bush, George Bush, Arnold Schwarzenegger, or Judge Clarence Thomas, which of those are not 8 good people? 9 10 SESSIONS: 11 Let me tell you how that came about, Congressman. So the question was, what do you do about 12 drug use, the epidemic we're seeing in the country and how you reverse it? 13 Part of that is a cultural thing. I explained how, when I became United States attorney in 1981 14 and the drugs were being used widely, over a period of years, it became unfashionable, 15 unpopular, and people were seen and it was seen as such that good people didn't use marijuana. 16 17 COHEN: 18 Would you propose... 19 20 SESSIONS: 21 That was the context of that statement. 22 23 COHEN: 24 It might've affected your short term memory. 25 26 GOODLATTE: 27 Time of the gentleman has expired. Document ID: 0.7.15798.13233-000001 20180509-0000820 DOJ-17-0214-C-000101 AMERICAN PVERSIGHT 797 1 2 COHEN: 3 Which drugs were those? 4 5 GOODLATTE: 6 Do you recognize the gentleman -- 7 8 COHEN: 9 One last question. Alabama or Auburn. 10 11 GOODLATTE: 12 The gentleman's time has expired. 13 14 COHEN: 15 Oh no, I went to law school, I love Alabama. 16 17 GOODLATTE: 18 I recognize the gentleman from Ohio, Mr. Jordan, for five minutes 19 20 JORDAN: 21 Mr. Attorney General, did the FBI pay Christopher Steele? 22 23 SESSIONS: 24 Where am I? 25 26 JORDAN: 27 Right here. Did the FBI pay Christopher Steele, the author of the dossier? Document ID: 0.7.15798.13233-000001 20180509-0000821 DOJ-17-0214-C-000102 AMERICAN PVERSIGHT 798 1 2 SESSIONS: 3 Those matters you'll have to direct to the -- I think maybe the special counsel. 4 5 JORDAN: 6 And why is that? I'm just asking if someone... 7 8 SESSIONS: 9 Well, I'm not able to reveal internal investigatory matters... 10 11 JORDAN: 12 You know... 13 14 SESSIONS: 15 Here that's under the investigation of anybody, but particularly I think the... 16 17 JORDAN: 18 This happened in the summer of 2016. We know the Clinton campaign, the Democrat national 19 committee paid through a law firm, Fusion GPS, to produce the dossier. We know the author was 20 Christopher Steele, it's been reported that he was on the payroll of the FBI. I'm just wanting to 21 know if in fact that is the case. 22 23 SESSIONS: 24 I'm not able to provide an answer to you. 25 26 JORDAN: 27 The FBI present the dossier to the FISA court? Document ID: 0.7.15798.13233-000001 20180509-0000822 DOJ-17-0214-C-000103 AMERICAN PVERSIGHT 799 1 2 SESSIONS: 3 I'm not able to answer that. 4 5 JORDAN: 6 Do you know if the FBI did the established process protocol in evaluating claims made in the 7 dossier? 8 9 SESSIONS: 10 I'm not able to answer that. 11 12 JORDAN: 13 On January 6th, then-FBI director James Comey, briefed president-elect Trump up in New York, 14 about the dossier. Surely they're after that, the fact that meeting took place and the subject of the 15 meeting was the dossier was leaked to CNN. Do you know who leaked that information? 16 17 SESSIONS: 18 I do not. 19 20 JORDAN: 21 Are you investigating who leaked that information? 22 23 SESSIONS: 24 That would be a matter within investigatory powers of the special counsel or the Department of 25 Justice. 26 27 JORDAN: Document ID: 0.7.15798.13233-000001 20180509-0000823 DOJ-17-0214-C-000104 AMERICAN PVERSIGHT 800 1 You said you got a number of investigations going on Mr. Attorney General, regarding leaks. Is 2 that likely one of those that you're investigating? 3 4 SESSIONS: 5 I'm not able to reveal the existence of investigations or not. 6 7 JORDAN: 8 Mr. Attorney General, I appreciate your service in the Senate. I appreciate your service at the 9 Justice Department, consider you a friend. And frankly, I appreciate yesterday's letter saying you 10 were considering appointing a special counsel, that you sent to us. But my concern is, we sent 11 you a letter three and a half months ago asking for a second special counsel. And if you're now 12 just considering it, I -- what's it going to take to get a special counsel? 13 We know that -- we know that former FBI director James Comey mislead the American people 14 in summer of 2016, when he called the Clinton investigation a matter. It's obviously an 15 investigation. We know FBI Director Comey, was drafting an exoneration letter one day before 16 the investigation was complete. We know Loretta Lynch, one day before the (ph) report came 17 out, five days before secretary Clinton was scheduled to be interviewed by the FBI met with 18 former President Bill Clinton on a tarmac in Phoenix. 19 We know after that meeting, when she was corresponding with public relations people at the 20 Justice Department she was using the name Elizabeth Carlisle. You know, as I've said before, it 21 seems to me if you're just talking golf and grandkids, you could probably use your real name. 22 We know that Mr. Comey publicized the investigation and we know he made the final decision 23 on whether to prosecute or not. And then when he gets fired, he leaks a government document 24 through a friend to the New York Times and what was his goal? To create momentum for a 25 special counsel, and of course it can't just be any special counsel, it's got to be Bob Mueller, his 26 best friend and predecessor, his mentor. The same Bob Mueller who was involved, we've now 27 learned, in this whole investigation with the informant regarding Russian businesses wanting to 28 do business in the Iranian business here in the United States, regarding the Iranian One deal. So, Document ID: 0.7.15798.13233-000001 20180509-0000824 DOJ-17-0214-C-000105 AMERICAN PVERSIGHT 801 1 I guess my main question is what's it going to take if all that, not to mention the dossier 2 information, what's it going to take to actually get a special counsel? 3 4 SESSIONS: 5 It will take a factual basis -- a standards of the appointment of special counsel. JORDAN: And is 6 that -- is that analysis going on right now? SESSIONS: It's in the manual of the Department of 7 Justice about what's required. We've only had two. The first one was the WACO, Janet Reno. 8 Senator Danforth, who took over that investigation as special counsel, and Mr. Mueller. Each of 9 those are pretty special factual situations. And we will use the proper standards, and that's what - 10 - I only think I can tell you, Mr. Jordan. 11 12 JORDAN: 13 Well, I appreciate (inaudible)... 14 (CROSSTALK) 15 16 SESSIONS: 17 ...you can have your idea, but sometimes we have to study what the facts are and to evaluate 18 whether it meets the standard ... 19 20 JORDAN: 21 Well said, so let me ask you this, if in fact... 22 23 SESSIONS: 24 ... it requires a special counsel. 25 26 JORDAN: Document ID: 0.7.15798.13233-000001 20180509-0000825 DOJ-17-0214-C-000106 AMERICAN PVERSIGHT 802 1 ...well, we know one fact; we know the Clinton campaign, the Democratic National Committee 2 paid for -- through the law firm, paid for the dossier. We know that happened. 3 And it sure looks like the FBI was paying the author of that document. And it sure looks like a 4 major political party was working with the federal government to then turn an opposition 5 research document, the equivalent of some National Enquirer story, into an intelligence 6 document, take that to the FISA Court, so that they could then get a warrant to spy on Americans 7 associated with President Trump's campaign. That's what it looks like. 8 And I'm asking you, doesn't that warrant, in addition to all the things we know about James 9 Comey in 2016, doesn't that warrant naming a second special counsel, as 20 members of this 10 committee wrote you three and a half months ago asking you to do? 11 12 SESSIONS: 13 Well, Mr. Comey's no longer the Director of the FBI. 14 15 JORDAN: 16 Thank goodness. 17 18 SESSIONS: 19 We have an excellent man of integrity and ability in Chris Wray. And I think he's going to do an 20 outstanding job. And I'm very happy about that. 21 22 JORDAN: 23 He's not here today, Attorney General Sessions... 24 25 SESSIONS: 26 And I would say (inaudible)... 27 (CROSSTALK) Document ID: 0.7.15798.13233-000001 20180509-0000826 DOJ-17-0214-C-000107 AMERICAN PVERSIGHT 803 1 2 JORDAN: 3 And I'm asking for a special counsel. 4 5 SESSIONS: 6 ... looks like... 7 8 GOODLATTE: 9 The time for the gentleman has expired. 10 11 SESSIONS: 12 ...there's not enough basis to appoint a special counsel . 13 14 GOODLATTE: 15 The time for the gentleman has expired. 16 The Chair recognizes the gentleman from Georgia, Mr. Johnson, five minutes 17 18 H. JOHNSON: 19 Thank you. 20 General, you have led a remarkable and notable career over the last 42 years as an attorney in 21 private practice, as the Attorney General of Alabama, then the U.S. attorney in Alabama, later 22 the U.S. Senator of Alabama, and now the Attorney General of the United States of America. 23 And you made a professional judgment call when you recused yourself from the investigation of 24 the Russian interference in the 2016 elections. And you've caught a lot of flak for that decision. 25 What I want to know is, why did you recuse yourself? Document ID: 0.7.15798.13233-000001 20180509-0000827 DOJ-17-0214-C-000108 AMERICAN PVERSIGHT 804 1 2 SESSIONS: 3 Well, thank you very much. 4 I told the Senate Judiciary committee, when I was confirmed, that I would evaluate those 5 matters. I would seek the counsel of the senior ethics adviser... 6 7 H. JOHNSON: 8 My question is why did you recuse yourself? 9 10 SESSIONS: 11 I'll get there. 12 13 H. JOHNSON: 14 I don't want you to filibuster (inaudible)... 15 16 SESSIONS: 17 OK. 18 19 H. JOHNSON: 20 I just (inaudible). 21 22 SESSIONS: 23 So, I did do that. I evaluated that. And they showed me something I was not familiar with, one of 24 the Code of Federal Regulations. It says if you participate in a substantial role in a campaign, a 25 Department of Justice employee should not participate in investigating that campaign. 26 27 H. JOHNSON: Document ID: 0.7.15798.13233-000001 20180509-0000828 DOJ-17-0214-C-000109 AMERICAN PVERSIGHT 805 1 All right. Thank you. 2 3 SESSIONS: 4 I felt that was correct. It was not because I had any... 5 6 H. JOHNSON: 7 You and I are in agreement. 8 9 SESSIONS: 10 ... concern about anything I had done previously. But it was, to me, if I were not bound by that I 11 don't see how other people in Department of Justice could be expected to follow the rules of the 12 Department either. 13 14 H. JOHNSON: 15 Well, thank you, sir. 16 And after you recused yourself, you do you did participate in the firing of the FBI director, who 17 was leading the investigation into the Russian interference with the 2016 elections. 18 Prior to Jim Comey's termination, were you contacted by the Donald Trump administration? 19 Anyone in that administration, Donald Trump himself or any of his political or campaign 20 officials about their quest to fire Jim Comey? 21 22 SESSIONS: 23 I am not able to, and cannot, reveal conversations with the President of the United States or his 24 top advisers. 25 26 H. JOHNSON: Document ID: 0.7.15798.13233-000001 20180509-0000829 DOJ-17-0214-C-000110 AMERICAN PVERSIGHT 806 1 Let me ask you this question; with regards to the AT&T proposed acquisition of Time Warner, 2 which owns CNN, it appears to be a vertical merger much like the Comcast, NBC, Universal 3 merger that DOJ approved. 4 But unlike its treatment of Comcast, NBC, Universal, DOJ has suggested strongly that it will not 5 approve the ATT&T-Time Warner merger unless Time Warner sells off CNN's parent company, 6 Turner Broadcasting. It's well known that your boss, President Trump, has great disdain for 7 CNN, which he calls fake news. 8 And what I want to know is, has the White House or any individual in or on behalf of the Trump 9 administration or the Trump Political team or campaign, excluding staff from FCC or DOJ -- has 10 anybody contacted you, your office or your assigns regarding that AT&T-Time Warner 11 acquisition? 12 13 SESSIONS: 14 First, I would say that I don't accept and cannot accept the accuracy of that news report. We have 15 a professional... 16 17 H. JOHNSON: 18 So your -- your -- your department has not told Time Warner that -- and AT&T that they must 19 shed Turner Broadcasting? 20 21 SESSIONS: 22 Our work is professional. They do meet with the... 23 24 H. JOHNSON: 25 Is that a false report or is it a true report? 26 27 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000830 DOJ-17-0214-C-000111 AMERICAN PVERSIGHT 807 1 I just would tell you -- I don't think it's -- I'm able to accept as accurate a news report that have 2 come out on that. 3 4 H. JOHNSON: 5 All right. I got you. Let me ask you this question. On October 18th, when testifying before the 6 Senate Judiciary Committee, Senator Sasse asked you if the Department had taken adequate 7 action to prevent election meddling in the future. You stated that there was no review underway 8 of the cybersecurity vulnerabilities. 9 Have you requested a review of what laws need to be updated in order to protect our elections 10 from foreign influence? 11 12 SESSIONS: 13 We have discussed those matters, but no completion has been done... 14 15 H. JOHNSON: 16 Are you conducting a review at this time? 17 18 SESSIONS: 19 Yes. Our team is looking at that. The FBI has real skills in that area... 20 21 H. JOHNSON: 22 What individual... 23 24 SESSIONS: 25 ...and I think we're not anywhere near where I would like us to be yet... 26 27 H. JOHNSON: Document ID: 0.7.15798.13233-000001 20180509-0000831 DOJ-17-0214-C-000112 AMERICAN PVERSIGHT 808 1 All right. Let me ask you this question. What individual with your department is leading that 2 inquiry? 3 4 SESSIONS: 5 We would be working with our voting rights section, our criminal section, our national security 6 section, probably, is the most knowledgeable in the hacking and -- area, as well as the expertise 7 in the FBI. 8 9 GOODLATTE: 10 Time of the gentleman... 11 12 H. JOHNSON: 13 Thank you. 14 15 GOODLATTE: 16 ...has expired. The Chair recognizes the gentleman from Texas, Mr. Smith, for five minutes. 17 18 SMITH: 19 Thank you, Mr. Chairman. 20 Mr. Attorney General, first of all, I want to thank you for all your efforts to restore the rule of 21 law. Nothing could be more important to our justice system and nothing could be more important 22 to our justice system and nothing could be more important to protecting the lives of Americans. 23 And frankly, not just protecting their lives, but keeping all Americans safe. In particular, many of 24 us appreciate your efforts to crack down on sanctuary cities that blatantly ignore federal 25 immigration laws to combat criminal gangs that prey on our communities, to return to robust 26 prosecutions of drug cases, to protect children from dangerous child predators and to safeguard 27 religious liberties that are enshrined in our constitution. Document ID: 0.7.15798.13233-000001 20180509-0000832 DOJ-17-0214-C-000113 AMERICAN PVERSIGHT 809 1 I'd like to go back, for a second, to sanctuary cities. I have been waiting 20 years for a president 2 and an administration that would enforce current immigration laws. So happens that I introduced 3 a bill in 1996 with Senator Al Simpson that among other things, outlawed sanctuary cities. So the 4 law is there and I want to thank you for being willing to enforce that law which will protect 5 many innocent Americans from harm, and perhaps, save their lives. More generally, I'd like to 6 ask you if you feel that there are any immigration laws and if so which ones need to be better 7 enforced. 8 9 SESSIONS: 10 There absolutely are and maybe even some improved. I know you've worked on that and the 11 chairman has worked on that with some excellent legislation. I totally believe that professional 12 legislation, I know the chairman has worked on and you've worked on, would be tremendously 13 helpful. 14 We we've got to deal with numbers and so when you create a mechanism by which -- we had 15 5,000 people in 2005 who claimed a credible fear. Last year, it was 95,000. This is creating 16 hearings and backlogs that were never intended to be part of the system. 17 Did not happen before and so there's so many things out there that burden our law enforcement 18 officers, make it more difficult, more expensive, more lengthy to complete these things. 19 We've just got to makeup our mind. We've got to make up our mind, do we want a lawful system 20 of immigration that serves the national interest or do we want open borders and we're not going 21 to enforce it. Thank you for your leadership, Mr. Smith. I know you'll be leaving this body also. 22 And I've enjoyed so much the honor of working with you. 23 24 SMITH: 25 Thank you, Mr. Attorney General. I'm not going to ask any questions and I'm good and with that, 26 Mr. Chairman. I'll yield back. Thank you. 27 28 GOODLATTE: Document ID: 0.7.15798.13233-000001 20180509-0000833 DOJ-17-0214-C-000114 AMERICAN PVERSIGHT 810 1 The Chair thanks the gentlemen. We're going to take a break Attorney General Sessions. So the 2 committee will stand in recess for 10 minutes. 3 4 SESSIONS: 5 Thank you. 6 (RECESS) 7 8 GOODLATTE: 9 The committee will reconvene. And The Chair recognizes the gentleman from Florida, Mr. 10 Deutch, for five minutes. 11 12 DEUTCH: 13 Thank you, Mr. Chairman. 14 Attorney General Sessions, thanks for being here. General Sessions, who do you work for? Do 15 you work for the American people or do you work for the president of the United States? 16 17 SESSIONS: 18 Well, I'm a member of the executive branch and I work for the American people. 19 20 DEUTCH: 21 And it's with that in mind, your work on behalf of the American people, that I would ask you 22 some questions about facts and public media reports. On February 14th, the president asked FBI 23 director about the Flynn investigation and I quote he said, "I hope you can see your way clear to 24 letting this go, to letting Flynn go. He's a good guy. I hope you can let this go", close quote. 25 Then on May 9th, the president fired Comey. On May 11th, he went on television and announced 26 that he fired Comey because of and I quote again, "The Russia thing with Trump and Russia", 27 close quote. Document ID: 0.7.15798.13233-000001 20180509-0000834 DOJ-17-0214-C-000115 AMERICAN PVERSIGHT 811 1 General Sessions, do you think it would be reasonable for the members of this committee to 2 conclude that the president, by first interfering in one investigation and then interfering in an 3 investigation into himself, committed obstruction of justice? 4 5 SESSIONS: 6 I don't believe that's a fair conclusion and I would -- but it's a matter that, I guess, would be in 7 breast of the special counsel. 8 9 DEUTCH: 10 And the obstruction of justice being any among other definitions, the most popular one, instead, 11 should any communication that endeavors to influence, obstruct or impede the due 12 administration of justice. That's exactly -- that's exactly what the president did in both of those 13 cases. 14 And in spite of moving on to the special counsel, you brought up in spite of efforts, bipartisan 15 efforts to protect the special counsel Mr. Mueller, Republican leadership and this committee 16 have refused to take action to ensure that he's protected. Do you believe that the president has the 17 legal authority to fire Special Counsel Mueller? 18 19 SESSIONS: 20 I'm not able to express an opinion on that at this point. 21 22 DEUTCH: 23 Can he fire members of the special counsel's team? 24 25 SESSIONS: 26 I'm not able -- I'm not able to answer that. Document ID: 0.7.15798.13233-000001 20180509-0000835 DOJ-17-0214-C-000116 AMERICAN PVERSIGHT 812 1 2 DEUTCH: 3 General Sessions, do you believe that the president should have the authority to be able to block 4 investigations into his own campaign? 5 6 SESSIONS: 7 Investigations have to be conducted by the appropriate law enforcement officers without fear and 8 favor, without politics or bias. 9 10 DEUTCH: 11 Right, and without fear of being dismissed by the president in order to block that investigation 12 because, again, that would certainly appear to represent obstruction of justice and when you fail 13 to acknowledge that, it is, essentially, a green light to the president to go ahead and do that. 14 I wanted to talk about the special counsel's investigation. Thus far, there have been some 15 indictments, there's a guilty plea. Can you tell me in your opinion, does the president have the 16 power to pardon George Papadopoulos? 17 18 SESSIONS: 19 It would be premature for me to comment on that, I believe. 20 21 DEUTCH: 22 Because? 23 24 SESSIONS: 25 The president has the power to pardon, there's no doubt about that. 26 27 DEUTCH: Document ID: 0.7.15798.13233-000001 20180509-0000836 DOJ-17-0214-C-000117 AMERICAN PVERSIGHT 813 1 Right. Would you be -- does he have the power to pardon Paul Manafort and Rick Gates ahead 2 of a trial and conviction? 3 4 SESSIONS: 5 I would -- I'm not able to comment on that. I haven't researched that question. I think it's set of 6 law -- maybe set of law, but I'm not -- 7 8 DEUTCH: 9 What do you think the set of law is? 10 11 SESSIONS: 12 I don't know. 13 14 DEUTCH: 15 And does he have the power to pardon Michael Flynn, any other member of the Trump 16 campaign? Let me ask you this, does the president have the power to pardon his own family 17 member? Could the president today, pardon Donald Trump Junior for, among other things, being 18 in contact with WikiLeaks regarding these e-mails? Can he make those pardons today, before 19 there is anything further that comes from special counsel's investigation? 20 21 SESSIONS: 22 I would not be able to answer that, at this moment, with any authority. 23 24 DEUTCH: 25 General Sessions, you started by telling us that you're the American people's lawyer. Now, you're 26 not recused from giving us answers on these. You're not comfortable giving us answers on these. 27 But here's the problem that we have, you said when you started your testimony today that there is 28 nothing more important than advancing the rule of law. Document ID: 0.7.15798.13233-000001 20180509-0000837 DOJ-17-0214-C-000118 AMERICAN PVERSIGHT 814 1 And when you answer the way you have, it suggests that the rule of law is crumbling at our feet. 2 You took an oath to uphold the Constitution. We took an oath to uphold the Constitution. And 3 while members of this committee and the majority may choose to abdicate their responsibility 4 with regard to these very important matters, you cannot. 5 And the interference -- what you've told us today in just this exchange, what we should all be 6 concerned about is another Saturday Night Massacre, if you can't tell us the president shouldn't 7 fire -- or can fire the special counsel and -- and everyone who works for him. We should be 8 worried if you're telling us of the president may be able to pardon, in advance, all of those who 9 are being investigated. We should be worried about the pursuit of the rule of law, General 10 Sessions... 11 12 SESSIONS: 13 Let me... 14 15 DEUTCH: 16 We -- we may, in this committee... 17 18 GOODLATTE: 19 The time of the gentleman has expired. The Attorney General can respond, if he chooses to do 20 so... 21 22 SESSIONS: 23 Well -- well, just briefly. One of the things, if you respect the rule of law, is the Attorney General 24 should not be giving legal opinions from the seat of his britches. So you need to be careful about 25 that. And that's what I'm saying to you today... 26 27 DEUTCH: 28 I -- I -- I do appreciate that, General Sessions... Document ID: 0.7.15798.13233-000001 20180509-0000838 DOJ-17-0214-C-000119 AMERICAN PVERSIGHT 815 1 2 GOODLATTE: 3 The time of the gentlemen has expired -- 4 (CROSSTALK) 5 6 DEUTCH: 7 These are not new issues that -- 8 9 GOODLATTE: 10 The Chair recognizes the gentleman from Texas, Mr. Poe. -- 11 12 DEUTCH: 13 That I would think require you give these opinions from the rule of your britches... 14 15 POE: 16 Thank you, Mr. Chairman. 17 18 DEUTCH: 19 I yield back. 20 21 POE: 22 Mr. Sessions, I'm over here on this side. If, pursuant to a warrant, there is a wiretap conversation 23 is seized under the Foreign Intelligence Surveillance Act, and the one person is a foreign agent, 24 the other person is an American citizen, is the release of the information regarding who the 25 American citizen is and/or the conversation of the American citizen, a violation of federal law? 26 27 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000839 DOJ-17-0214-C-000120 AMERICAN PVERSIGHT 816 1 I believe it is. 2 3 POE: 4 And if somebody releases that information... 5 6 SESSIONS: 7 There may be factual distinctions, but I think it -- it -- it... 8 9 POE: 10 I know, it's just a hypothetical. Somebody releases the information of the name of that person 11 and or the information contained by that person, that is a federal offense? 12 13 SESSIONS: 14 Unacceptable and could be a federal offense. 15 16 POE: 17 So has anybody been prosecuted under your regime for doing that, whether it's been in the White 18 House or some other government agency where we hear about leaks of classified information, 19 are you prosecuting anybody for that? 20 21 SESSIONS: 22 For release of FISA-obtained information? 23 24 POE: 25 Release of the information of who the American is and/or the conversation by the American, 26 that's classified information. Is your department investigating anybody for that? Document ID: 0.7.15798.13233-000001 20180509-0000840 DOJ-17-0214-C-000121 AMERICAN PVERSIGHT 817 1 2 SESSIONS: 3 I cannot confirm or deny the existence of an investigation... 4 5 POE: 6 Are you prosecuting anybody for that? 7 8 SESSIONS: 9 Nobody's under indictment, although we've got at least four indictments this year of leaks of 10 classified information... 11 12 POE: 13 All right, I want to talk about -- 14 15 SESSIONS: 16 And we will continue to press those cases. 17 18 POE: 19 All right, good. 20 All right. Good. 21 We want to talk about the Foreign Intelligence Surveillance Act; secret courts issuing secret 22 warrants to get information on terrorists overseas. That's generally the purpose of the FISA law 23 and FISA courts. Will you agree with that? 24 25 SESSIONS: 26 Well, that's not a perfect summary, but it's... Document ID: 0.7.15798.13233-000001 20180509-0000841 DOJ-17-0214-C-000122 AMERICAN PVERSIGHT 818 1 2 POE: 3 That's the short... 4 5 SESSIONS: 6 ... got substance to it. 7 8 POE: 9 It's too short. 10 We know we can't trust the NSA. James Clapper testified before this committee in 2013 that the 11 NSA was not spying on Americans. Then, all of a sudden, this guy name Snowden showed up 12 and we found out -- well, I don't like Snowden at all -- he ought to be prosecuted, I think. But 13 anyway, we learned that the American public was being spied on by the NSA. 14 Part of the Foreign Intelligence Surveillance Act gives the NSA authority to seize information 15 like e-mails, text messages, communications, by these bad guys, foreign agents or terrorists 16 overseas, to collect their information to make sure that America is safe. 17 During that process, as you know, incidentally -- call it incidental information, America -- 18 information on Americans, who they are and what those conversations may be is also seized. The 19 NSA says that's incidental information. 20 Now, it's my understanding the Justice Department is opposed to the USA Liberty Act, which 21 would require that before government goes into that information on Americans, where they're 22 not the target -- the target's these terrorists -- goes into that information on Americans, that there 23 has to be a warrant signed by a real judge that states probable cause, before that information can 24 be seized. 25 Now my understanding is, the Justice Department, under your leadership is opposed to that 26 warrant requirement. Is that correct? Document ID: 0.7.15798.13233-000001 20180509-0000842 DOJ-17-0214-C-000123 AMERICAN PVERSIGHT 819 1 2 SESSIONS: 3 That is absolutely correct. 4 5 POE: 6 So you're a former judge. 7 8 SESSIONS: 9 A would-be judge. 10 11 POE: 12 Pardon? 13 14 SESSIONS: 15 A would-be judge. 16 17 POE: 18 A wanna-be judge. Yes. I'm a former judge too. You don't think probable cause and a warrant 19 requirement is required to go into that information that is -- first of all, the seizure is done by 20 government without a warrant, so it's seized already. And before it can be then searched, you 21 also don't require or believe that a warrant should be required by any court, to go into that 22 information. 23 24 SESSIONS: 25 Well... 26 27 POE: Document ID: 0.7.15798.13233-000001 20180509-0000843 DOJ-17-0214-C-000124 AMERICAN PVERSIGHT 820 1 I'm just asking the same question. 2 3 SESSIONS: 4 The courts have so held. 5 6 POE: 7 I'm not asking that question. 8 9 SESSIONS: 10 Well, I -- I agree with the courts. Not you. 11 12 POE: 13 (Inaudible). 14 (CROSSTALK) 15 16 SESSIONS: 17 Not you, Congressman, on that. You get lawfully obtained records -- documents. 18 19 POE: 20 Don't you think -- excuse me -- reclaiming my time. 21 22 SESSIONS: 23 All right. 24 25 POE: Document ID: 0.7.15798.13233-000001 20180509-0000844 DOJ-17-0214-C-000125 AMERICAN PVERSIGHT 821 1 You agree with the courts on that, not me. But let me ask -- let me tell you something. It is the 2 responsibility of Congress to set the privacy standard for Americans. 3 4 SESSIONS: 5 That is correct. 6 7 POE: 8 My personal opinion, and I think the Constitution supports it, that before government can go in 9 and seize something and then search it, on an American citizen that's incidental to the search on 10 the target, government should get a warrant for that conduct. That's spying on Americans. 11 And we know that we can't trust the NSA to do -- to keep from doing that. Is that data ever, ever 12 destroyed on Americans? Or is it kept forever? 13 14 SESSIONS: 15 I believe it has a -- definitely has a limited time span. I think it's five years. 16 17 GOODLATTE: 18 The time of the gentleman has expired. 19 20 POE: 21 So Americans shouldn't be concerned that information is being collected on them and searched 22 and we don't have any say so about a warrant. 23 24 GOODLATTE: 25 The time of the gentleman has expired. The Chair recognizes... 26 27 POE: Document ID: 0.7.15798.13233-000001 20180509-0000845 DOJ-17-0214-C-000126 AMERICAN PVERSIGHT 822 1 Thank you. 2 3 GOODLATTE: 4 ... the gentleman from Illinois, Mr. Gutierrez, for five minutes. 5 6 GUTIERREZ: 7 Mr. Chairman, before I begin, I think I have a solution that could allow the committee to move 8 onto other important national matters, like gun control and immigration. 9 Your side clearly wants an investigation of Hillary Clinton. And our side has been begging for 10 months to hold hearings and start an investigation of the Trump administration and campaigns 11 and proper ties to Mr. Putin and the Russian government. 12 My solution would save the American taxpayers a lot of grief and a lot of money by eliminating 13 the need for the investigations. I propose we simply go to the president and the former Secretary 14 of State and ask them both to resign. I'll go to Hillary Clinton, you can go to Donald Trump and 15 we'll say to them both to resign. Then we can move on as a nation from an election that just 16 never seems to end. 17 Now I did Google organizations that Hillary Clinton leads and it came out zero. So I'm not quite 18 sure what you're going to get her to resign from, because she doesn't appear to be in charge of 19 anything. Last time I checked, she got three million more votes than Donald Trump, but she lost 20 the election. So I don't know why don't we move on and really look at the nation. 21 So Attorney General, I'd like to ask you -- you said earlier today, it was a brilliant campaign, 22 referring to the Donald Trump campaign. Is that true? You feel that? 23 24 SESSIONS: 25 It was a -- a remarkable thing that overcame a lot of obstacles... 26 27 GUTIERREZ: Document ID: 0.7.15798.13233-000001 20180509-0000846 DOJ-17-0214-C-000127 AMERICAN PVERSIGHT 823 1 A remarkable, brilliant campaign. 2 3 SESSIONS: 4 ...couldn't have... 5 6 GUTIERREZ: 7 Now, in campaigns -- candidates make promises during campaigns. You think candidates should 8 fulfill the promises they make during campaigns? 9 10 SESSIONS: 11 People make a lot of promises and you should strive to... 12 13 GUTIERREZ: 14 Do you think they should fulfill those promises? It was a brilliant campaign... 15 16 SESSIONS: 17 ...honor your promises. 18 19 GUTIERREZ: 20 ...a remarkable campaign. And as a member of the cabinet of -- of -- of President Trump, do you 21 feel an obligation to fulfill those campaign promises? I mean, when he asked you to come on, did 22 you think you should fulfill the campaign promises? 23 24 SESSIONS: 25 I believe the Attorney General should enforce the law first and foremost... 26 27 GUTIERREZ: Document ID: 0.7.15798.13233-000001 20180509-0000847 DOJ-17-0214-C-000128 AMERICAN PVERSIGHT 824 1 I understand enforce the law, but he said he wanted -- you're helping him on the Muslim ban, on 2 immigration issue. I mean, do you think should fulfill those promises? 3 4 SESSIONS: 5 The president makes decisions and if it's lawful, we defend it. 6 7 GUTIERREZ: 8 If it's lawful. If it's lawful. OK, I like that, that if it's lawful. But you'd said it was a remarkable 9 and brilliant campaign. He said quote, during the second debate, "If I win, I'm going to instruct 10 my Attorney General" -- that would be you, because he chose you -- "to get a special prosecutor 11 to look into your situation" -- referring to Hillary Clinton -- "because there's never been so many 12 lies, so much deception." End quote. 13 And when Hillary Clinton responded, he said, "Because you'd be in jail." Are you going to fulfill 14 that promise he made during the second debate? Because he did say he'd put her in jail. He said 15 he ask the Attorney General, you, to set a special -- that's what he said. It's a quote. I didn't make 16 it up. What do you say? Are you going to keep that campaign promise? 17 18 SESSIONS: 19 I'll fulfill my responsibilities under the law. 20 21 GUTIERREZ: 22 Are you going to keep the campaign promise? It's a yes or no. It's a promise that your boss, he 23 hired you, to fulfill. Are you going to fulfill that? 24 25 SESSIONS: 26 We will comply with the law with regard to special prosecutor appointments. Document ID: 0.7.15798.13233-000001 20180509-0000848 DOJ-17-0214-C-000129 AMERICAN PVERSIGHT 825 1 2 GUTIERREZ: 3 You -- are you going to appoint one as he promised during the campaign? He's reminded you a 4 couple of times in a few of his tweets that that's what he wants you to do. 5 6 SESSIONS: 7 I'll fulfill my duty as Attorney General. 8 9 GUTIERREZ: 10 OK. So the brilliant campaign, remarkable campaign, big smile on your face, you love the 11 campaign, but you're not going to fulfill those campaign promises? I hope you don't, in this 12 particular case. So I'm kind of happy with your answer up to now. 13 So as -- Mr. Attorney General, I'm going to ask you another series of questions. And I'd like to 14 go back to the beginning of the hearing and get you to answer the following question. 15 Are you aware that you are under oath and that your answers must be the truth, the whole truth 16 and nothing but the truth, Mr. Attorney General? 17 18 SESSIONS: 19 I'm aware of that. 20 21 GUTIERREZ: 22 OK. Good. So I -- I brought this little salt shaker here. And you'll forgive me if I just put a little 23 bit of doubt into that answer. And just to remind myself that I might need this. And I ask 24 unanimous consent that this article from Mother Jones Magazine be entered into the record with 25 the headline, "Three Times Jeff Sessions Made False Statements Under Oath To Congress." 26 I ask this because I don't want to hear in a few days or in a few weeks, that your answers, Mr. 27 Attorney General, have changed based on newly uncovered evidence that what you told us Document ID: 0.7.15798.13233-000001 20180509-0000849 DOJ-17-0214-C-000130 AMERICAN PVERSIGHT 826 1 before was in fact false, misleading, or something other than the truth, the whole truth, and 2 nothing but the truth. I ask unanimous consent. 3 4 GOODLATTE: 5 Without objection, that be made part of the record. 6 7 GUTIERREZ: 8 Thank you. Under oath, in the Senate, you said as a surrogate, quote, "A time or two for the 9 Trump campaign, you did not have communication with Russians." But in March, it was 10 revealed you did. Did you have campaign communications with the Russians? Because it appears 11 you have had campaign communications with the Russians, Mr. Attorney General. 12 13 SESSIONS: 14 That is, I'd like to respond to that. I thought I had the -- a paper right here. And surely, (OFF 15 MIC), here it is. Mr. Chairman, take a couple of minutes... 16 17 GOODLATTE: 18 You can respond to the question. 19 20 SESSIONS: 21 ...to respond to that. Colleagues, I guess I should say former colleagues... 22 23 GUTIERREZ: 24 They left. 25 26 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000850 DOJ-17-0214-C-000131 AMERICAN PVERSIGHT 827 1 Senator Franken asked this question. OK, CNN has just published a story and I'm telling you 2 about a new story that's just been published. I'm not expecting you to know whether or not it's 3 true. But CNN just published a story alleging that the intelligence community of the United Sates 4 of America. The intelligence community provided documents to the president elect last week that 5 included information that quote, "Russian opportunists claim to have compromising personal and 6 financial information about Mr. Trump", close quote. These documents also allegedly say quote, 7 "There was a continuing exchange of information during the campaign between Trump's 8 surrogates and intermediaries for the Russian government", close quote. 9 It goes on to say, now again, I'm telling you this is all coming out. So you know, but if it's true 10 it's obviously extremely serious. And if there is evidence that anyone affiliated with the Trump 11 campaign communicated with the Russian government in the course of this campaign, what will 12 you do? I was taken aback by this. I'd never heard, this is -- happened while I was testifying, I 13 suppose. And I said, Senator Franken, I'm not aware of any of those activities. I have been called 14 surrogate a time or two in the campaign and I didn't have -- did not have communications with 15 the Russians. I'm unable to comment on it. 16 17 GUTIERREZ: 18 And you're not going to correct that today? 19 20 SESSIONS: 21 I -- my answer was responsive to his charge about a continuing... 22 23 GUTIERREZ: 24 Do you want to correct it or clarify it today for us? 25 26 SESSIONS: 27 I'm... Document ID: 0.7.15798.13233-000001 20180509-0000851 DOJ-17-0214-C-000132 AMERICAN PVERSIGHT 828 1 2 GOODLATTE: 3 The time of the gentleman has expired. The attorney general can answer the question, but but 4 then we're moving on. 5 6 SESSIONS: 7 So this is really important and I appreciate the opportunity to share it. So my focus was on 8 responding to the concern that I, as a surrogate, was participating in a continuing serious of 9 meetings with intermediaries for the Russian government. And I certainly didn't mean I'd never 10 met a Russian in the history of my life. So I didn't think to -- didn't think it was responsive, and 11 my response was according to the way I heard the question as honestly, I could give it at the 12 time. I hope you will treat me fairly, when you evaluate that. 13 14 GOODLATTE: 15 The Chair recognizes the gentleman from Pennsylvania, Mr. Marino, for five minutes. 16 17 MARINO: 18 Thank you, Chairman. 19 Thank you General for being here, I appreciate it. I'm going to ask you some questions because I 20 am the Chairman of the Regulatory Reform and Anti-Trust Subcommittee on Judiciary. And 21 anti-trust is an issue that is now surfacing moreso than it ever has in the past. And Justice 22 Department's role is very critical in anti-trust issues to determine whether there is an anti-trust 23 violation. 24 I understand that the Justice Department's position on the AT&T merger will require divestment 25 of some assets. Behavioral conditions have been used in vertical mergers, since they pose a 26 lesser danger to competition than horizontal mergers. Is the structural condition in vertical 27 mergers a policy for DOJ at this point? Document ID: 0.7.15798.13233-000001 20180509-0000852 DOJ-17-0214-C-000133 AMERICAN PVERSIGHT 829 1 2 SESSIONS: 3 Anti-trust policy is important. I've never been an expert at it. It was one subcommittee of the 4 Judiciary I never chose to be a part of. But we have a experienced team in the Department of 5 Justice. We do try to handle each case professionally. We have a good chief now of the anti-trust 6 division. 7 And I'm not able to announce any new policies at this time, Congressman. 8 9 MARINO: 10 Will there be a discussion concerning vertical and horizontal mergers when it comes to the so￾11 called term, behavioral conditions, where two companies that are merging may have to divest. 12 Could there be future discussion as to when this behavioral condition would be implemented? 13 14 SESSIONS: 15 While the vertical horizontal issue is something that has always been part of the discussion, I 16 don't think it's dispositive of any final decision. But I'm really not able, at this time, to comment 17 on anything that would be part of an ongoing matter. 18 19 MARINO: 20 I understand. 21 22 SESSIONS: 23 And I appreciate you giving me an opportunity to -- not attempt to answer that. 24 25 MARINO: 26 I'm going to switch to human trafficking now. When I was a U.S. attorney, we handled some 27 very heartbreaking and very severe situations concerning human trafficking. And I know that Document ID: 0.7.15798.13233-000001 20180509-0000853 DOJ-17-0214-C-000134 AMERICAN PVERSIGHT 830 1 you understand, like I understand, the challenges involved there. But what can you -- tell me 2 what DOJ has done in upping the prosecutions and the investigations for anti trafficking? 3 4 SESSIONS: 5 We believe strongly that we can do even more. It's been a priority for a number of years. I was 6 recently in the Minnesota United States Attorney's office. They had a major international case 7 and I was surprised how much money was involved. Almost as much as drug dealers may make. 8 We have a recent report of our people meeting with a child exploitation group. My associate 9 attorney general number three, Rachel Brand, is very interested in this. And I've empowered her 10 to be engaged in advancing our efforts in this regard. And she's enthusiastically responding to 11 that. 12 13 MARINO: 14 If I may make a suggestion as well. Several years ago, we in the middle district of Pennsylvania, 15 prosecuted one of the biggest sex trafficking cases on the East Coast, obviously, and for the most 16 part involving women and very young girls. 17 We had a good conviction. These people want to wait for 30 or 40 years. But one of the areas 18 that we have to help more with the victims is the protection side of things. Of course, during the 19 investigation and during the trial, but subsequent to the convictions that these people aren't, these 20 women aren't, and children aren't forgotten. And there are protections there to keep them from 21 anybody else attempting to do what's been done in the past. And I thank you so very much for 22 your service to us and I yield back. 23 24 SESSIONS: 25 Thank you. Thank you for your service. 26 27 GOODLATTE: 28 The Chair recognizes the gentlewoman from California, Ms. Bass, for five minutes. Document ID: 0.7.15798.13233-000001 20180509-0000854 DOJ-17-0214-C-000135 AMERICAN PVERSIGHT 831 1 2 BASS: 3 Thank you. Thank you, Mr. Chair. 4 Between 1956 and 1971, the FBI ran a counterintelligence program named COINTELPRO that 5 was initiated by J. Edgar Hoover. COINTELPRO mainly targeted civil rights leaders such as 6 Martin Luther King and it's commonly understood that this was an abuse of its surveillance 7 power in a manner to suppress a peaceful movement. So I would like to ask Mr. Chair, 8 unanimous consent to enter this report into the record, which is Black Identity Extremists Likely 9 Motivated to Target Law Enforcement Officers. I believe, earlier you said you were not familiar 10 with the report. Is that correct? 11 12 SESSIONS: 13 Well, I haven't read it. I know some of the alleged targeting of officers by certain groups... 14 15 BASS: 16 OK, so I -- I would like to know -- and I'll ask you about that in a minute. So you are somewhat 17 familiar with it. Who had the power in your department to order a report like this? 18 19 SESSIONS: 20 I'm not sure how that report got ordered. I don't believe I explicitly approved it or directed it. 21 22 BASS: 23 OK. So you're not -- you haven't necessarily read the report. But you are familiar with the term 24 black identity extremist? 25 26 SESSIONS: 27 Well, I think so, yes. Document ID: 0.7.15798.13233-000001 20180509-0000855 DOJ-17-0214-C-000136 AMERICAN PVERSIGHT 832 1 2 BASS: 3 So can you tell me what that term means to you? Do you believe that there is a movement of 4 African-Americans that identify themselves as black identity extremists, and what does that 5 movement do? 6 7 SESSIONS: 8 Well I'd be interested to see the conclusions of that report. But I'm aware that there are groups 9 that do have an extraordinary commitment to their racial identity. And some have transformed 10 themselves, even into the violent activist. So... 11 12 BASS: 13 Are you aware of white organizations that do this as well? Given that white supremacy is well 14 documented, well researched movements such as the Neo-Nazis, the Ku Klux Klan, et cetera. 15 Are they white identity extremists? 16 17 SESSIONS: 18 I'm -- I didn't follow, that question, please, again? 19 20 BASS: 21 Is there a term are a report on white identity extremist? You mentioned you were familiar with 22 black people who identify with their racial identity. 23 24 SESSIONS: 25 Yes, but is not coming to me at this moment. 26 27 BASS: 28 Not coming to you? Document ID: 0.7.15798.13233-000001 20180509-0000856 DOJ-17-0214-C-000137 AMERICAN PVERSIGHT 833 1 2 SESSIONS: 3 It's... 4 5 BASS: 6 Certainly a group such as the Ku Klux Klan would be... 7 8 SESSIONS: 9 Yes, and then the skinhead movements. But there are racial identity white movements are that 10 have been identified, for sure. 11 12 BASS: 13 Well, has the FBI done a report on white identity extremists that are likely motivated to target 14 law enforcement officers? Is there such a report? 15 16 SESSIONS: 17 I'm -- I'm not aware of that. 18 19 BASS: 20 OK. Are you aware of a group called the sovereign citizens? 21 22 SESSIONS: 23 I've heard that group, yes. 24 25 BASS: 26 And I believe that the sovereign citizens is primarily a white organization that absolutely has 27 targeted police officers and killed police officers. You're not aware of that? Document ID: 0.7.15798.13233-000001 20180509-0000857 DOJ-17-0214-C-000138 AMERICAN PVERSIGHT 834 1 2 SESSIONS: 3 I'm not aware of all their crimes, but I know they are a group that's known to have violent 4 tendencies. 5 6 BASS: 7 Could you name an African-American organization that have committed violent acts against 8 police officers? Could you name one today? In this report, they name organizations from 30, 40 9 years ago, but can you name of one today that has targeted police officers in a violent manner? 10 11 SESSIONS: 12 I believe I could, but I would want to be -- to confirm that and submit it to you in writing. But I 13 believe we had, within the last year or so, four police officers killed by a group that some have 14 described as extremist... 15 16 BASS: 17 So what has happened is is that there have been a couple of instances in which African 18 Americans did kill police officers who were not associated with a black organization. And so 19 one, for example, in Baton Rouge, was associated with Sovereign Citizens, which is primarily a 20 white group. 21 So you should know that there's a lot of concern in the community, especially from organizations 22 such as Black Lives Matter -- and by the way, would you consider Black Lives Matter a black 23 identity extremist group? 24 25 SESSIONS: 26 I'm not able to comment on that. I'm not a -- have not so declared it. 27 28 BASS: Document ID: 0.7.15798.13233-000001 20180509-0000858 DOJ-17-0214-C-000139 AMERICAN PVERSIGHT 835 1 So you should know that a lot of activists around the country are very concerned that we're 2 getting ready to repeat a very sad chapter of our history where people who are rightfully 3 protesting what they consider to be an injustice in their community, which is their relationship 4 with police officers, are now being targeted and labeled as extremists and are going through 5 periods of surveillance and harassment. 6 And so, I would like to know, what is your department going to do to protect the rights of 7 average citizens to protest if they have a concern about police officers? 8 9 SESSIONS: 10 This department will not unlawfully target people. 11 12 BASS: 13 So, if that's the case, then, I would ask that you review this report, black identity extremists likely 14 motivated to target law enforcement officers. Because I personally don't believe that any such 15 organizations exist. The organizations that are referred to in this report are organizations from 16 decades ago. And so I would like to know what will you do to, essentially, roll back what is 17 listed in this report? Because it's not accurate. Sir? 18 19 SESSIONS: 20 I will -- we will look at the report. I actually would be interested in reading it. But they usually 21 do an excellent job, objective and fair on those kind of reports. 22 23 BASS: 24 OK, well, just... 25 26 SESSIONS: 27 Time of the -- time of the gentlewoman has expired. The Chair recognizes the gentleman from 28 South Carolina, Mr. Gowdy, for five minutes. Document ID: 0.7.15798.13233-000001 20180509-0000859 DOJ-17-0214-C-000140 AMERICAN PVERSIGHT 836 1 2 GOWDY: 3 Thank you, Mr. Chairman. 4 Thank you, Mr. Attorney General. I want to cover a couple of areas, but I want to start with 5 something that's very important to me. I think it's important to all people in this country of good 6 conscience, irrespective of their political ideation, and that is the independence of the 7 Department of Justice. 8 And, in my judgment, 2016 and 2017 have been challenging years for the Department of Justice. 9 You know, the decision to charge someone carries with it multiple layers of review. There's -- 10 there's a grand jury, there's a petit jury, there's a trial judge, there are post-trial motions, there's 11 appellate courts, there are courts of habeas corpus. And then there's the media and then there's 12 Congress. 13 But the decision not to charge someone does not carry with it the same corresponding layers of 14 review. But in some instances, it's every bit as important to understand why law enforcement did 15 not do something and why prosecutors did not do something. I'm not interested in re-litigating 16 the FBI's decision not to charge Secretary Clinton. That decision's been made, it's been explained 17 and I'm not interested in re-litigating it. 18 I am, however, interested in reviewing 2016 and 2017 with respect to the Department of Justice. 19 And Mr. Attorney General, there was a time when my colleagues on the other side of the aisle 20 were interested in having some of these questions answered as well. It wasn't a year ago that -- 21 that some of my Democratic friends wanted Jim Comey investigated and prosecuted for a Hatch 22 Act violation. 23 That was 12 months ago. And it was absurd then and it's absurd now. But what's not absurd is -- 24 is when my Democrat colleagues ask, why did you decide to publicize one investigation, but not 25 another? Why did you decide to appropriate a decision away from the Justice Department, which 26 is very unusual for the head of the FBI to serve as both the investigator and the decision maker. Document ID: 0.7.15798.13233-000001 20180509-0000860 DOJ-17-0214-C-000141 AMERICAN PVERSIGHT 837 1 Just like Republicans wanted to know, Mr. Comey, did you reach your conclusions before the 2 end of the investigation? Did you make decisions whether to charge or not to charge before you 3 interviewed all of the witnesses? 4 These are questions that, to me, go to the core of whether or not the department can be respected 5 separate and aside from politics. I mean I -- I -- I get, I guess, that certain departments are just 6 inherently political. But the Department of Justice should not be. And -- and so I -- I tell you that 7 up front, that Chairman Goodlatte and I are going to be looking into the decisions made in 2016 8 and 2017. 9 And -- and I think I can speak for him and I know I can speak for myself. My motivation is -- is a 10 love for that Department and a love for the concept of blind justice that doesn't care whether it's 11 an even-numbered year or an odd-numbered year. 12 And to the extent that there were decisions made, including the decision to -- to -- to write a 13 public letter in October of last year and -- and follow that up with another public letter in 14 November. Those are legitimate questions and I hope that the Department will cooperate both 15 with respect to making witnesses available, but also with -- with respect to document, so 16 Congress can better understand the decisions that were made and not made and restore some 17 modicum of trust, that all people, whether they agreed with the decisions or not, at least 18 understand why they were made. 19 Now, Mr. Conyers asked you whether or not it was appropriate for the president, to wait... 20 21 SESSIONS: 22 Could I -- could I respond briefly to that? 23 24 GOWDY: 25 Sure. Yes, sir. 26 27 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000861 DOJ-17-0214-C-000142 AMERICAN PVERSIGHT 838 1 You're familiar with the Inspector General... 2 3 GOWDY: 4 I'm meeting with him, sir. 5 6 SESSIONS: 7 And they make -- they make public their investigations. And several of the matters that involve 8 the FBI are under full and intense review by the Inspector General. And perhaps they can, under 9 their rules of disclosure, perhaps you could inquire more about how that's ongoing. But I'm not 10 able to give the details to you at this time. That's a serious matter. It's in my response to the 11 chairman of yesterday. 12 13 GOWDY: 14 Well, I -- I didn't intend to ask you to respond to it because I -- you're right. Mr. Horowitz is 15 looking into it. In fact, I'm meeting with Mr. Horowitz this afternoon -- not in that capacity, but 16 in another, and you're right. At some point he's going to let Congress know what he found, but 17 that does not absolve us of our responsibility to also look into it. 18 Mr. Conyers asked you whether or not it was appropriate for the president to weigh in, in an 19 ongoing investigation. And, of course, the answer to that is no. It is not appropriate. It's not 20 appropriate in 2017. It wasn't appropriate when President Obama did it in the IRS targeting 21 scandal. It wasn't appropriate when President Obama did it in the ongoing investigation into 22 Hillary Clinton's server. 23 It is never appropriate for a president to tell a Department of Justice what outcome it should 24 reach. I just wish my friends on the other side had the same outrage when President Obama did 25 it, as they do now. I mean, I guess that's what I'm -- this will be my last question to you. 26 You're nominated by a president. You're approved by a Senate, but yet you work for a virtue. 27 You work for a blindfolded woman holding a set of scales. And that is what makes our culture 28 different. Document ID: 0.7.15798.13233-000001 20180509-0000862 DOJ-17-0214-C-000143 AMERICAN PVERSIGHT 839 1 How do you restore people's trust, Republicans and Democrats, confidence in a Department of 2 Justice when it seems like different rules apply depending on who's in power? 3 4 GOODLATTE: 5 The time of the gentleman has expired. The attorney general will be permitted to answer. 6 7 SESSIONS: 8 Well, it's a good question and important question. We intend to do our work according to the 9 established principals of the department of justice. We will not be infected by politics or bias. 10 We will make only decisions we believe are right and just. And we're not going to use the 11 department to unlawfully advance the political agenda. We're going to enforce laws of this 12 country effectively as Congress has passed them. 13 And I am determined that when the years go by, that people will say this department of justice 14 did not crumble. It stayed firm and true to the great principles that I was taught in the 15 years I 15 served in the Department of Justice. Two and a half is an assistant, 12 to the United States 16 attorney, and looking up to the attorney general is somehow, so far removed form me that was 17 beyond recognition. But now I'm in that position, I think I understand the gravity of it. I think I 18 understand the importance of responding to your question, and we'll do our best. 19 20 GOWDY: 21 Yes sir, thank you. 22 23 GOODLATTE: 24 The Chair recognizes the gentleman from Louisiana, Mr. Richmond, for five minutes. 25 26 RICHMOND: 27 Mr. general, I have the honor serving as Chair of the Congressional Black Caucus. You were not 28 there, but I'm sure you are aware. And if you're not aware, I'm telling on myself that I testified Document ID: 0.7.15798.13233-000001 20180509-0000863 DOJ-17-0214-C-000144 AMERICAN PVERSIGHT 840 1 against your nomination. And I did so because I was afraid that we would go back to a time 2 where discrimination was rampant, and that diversity was not appreciated. And that the right to 3 vote for minorities and African Americans would be further -- more obstacles would be set up. 4 And I listened to your opening statement and I listened your remarks since then and you talked 5 about voter I.D. The V.C. case, which in Texas ruled that their vote -- Texas voted identification 6 law had discriminatory -- discriminatory portions against African Americans. The district court 7 ruled that way, the appelate court affirmed that ruling, and then you withdrew from the case after 8 two courts ruled that it was discriminatory. How does that mesh -- and then argued on the side of 9 Texas -- how does that mesh with the right to make sure that African Americans had unfettered 10 access to the voting poles. 11 12 SESSIONS: 13 Congressman, the way that happened was that Texas had passed a voter ID laws that the courts 14 did not approve but struck down. Election was coming up I believe, and the court approved a -- a 15 voter ID procedure that they approved for that election. And the Texas legislature then repealed 16 its previous law that had been found to be unconstitutional or improper. And passed the one that 17 the court had approved, so we felt that the voter ID law has been approved a proper voter ID law 18 is constitutional and we believe that one is constitutional. And that's why the position was 19 changed. 20 21 RICHMOND: 22 And also in judging Department of Justice, are in terms of nominating judges to the bench. Our 23 information tells us that out of all the judges that have been nominated, I think 91 percent have 24 been white males. Does that foster diversity? 25 26 SESSIONS: 27 I'm not aware of the numbers, but we should look for quality candidates . And I think diversity is 28 a matter that's -- has significance. Document ID: 0.7.15798.13233-000001 20180509-0000864 DOJ-17-0214-C-000145 AMERICAN PVERSIGHT 841 1 2 RICHMOND: 3 Well, the National Bar Association could recommend and has recommended a number of 4 African American and other minority attorneys who are qualified. So let me just ask you -- and if 5 you don't know the answer to these, just let me know that you'll get me the information. But how 6 many African Americans do you have on your senior staff? 7 8 SESSIONS: 9 I do not have a senior staff member at this time that's an African American. 10 11 RICHMOND: 12 Out of all... 13 14 SESSIONS: 15 I would note, in Alabama, I participated in recommending an African American judge and have 16 had African American judges before, and... 17 18 RICHMOND: 19 We're talking about this administration, though. Of -- of all of the U.S. attorneys that have been 20 nominated or confirmed, how many have been African American? 21 22 SESSIONS: 23 One in Alabama that I've recommended that I knew. He's been confirmed. 24 25 RICHMOND: 26 And I believe it's -- I believe it's only that one. Out of all of the special agents in charge of FBI 27 bureaus around the country, how many are African American? Document ID: 0.7.15798.13233-000001 20180509-0000865 DOJ-17-0214-C-000146 AMERICAN PVERSIGHT 842 1 2 SESSIONS: 3 I do not know. 4 5 RICHMOND: 6 Would you get that for me? And here's the gist of what I'm saying. For a lot of people who 7 objectively look from the back, like I do and may people where I live, the question is whether 8 we're going towards inclusion and diversity or whether we're going back. So I applaud the 9 president for his approach to the opioid epidemic, which everyone in this room is concerned 10 about. 11 We're losing over 100 people a day. But your decision to reverse Eric Holder's Smart on Crime 12 Initiative goes back to the crack, tough on crime. And I think that you specifically said that you 13 want the U.S. attorneys to charge and pursue the most serious, readily provable offenses and 14 sentences. But with opioids, we're treating it as a mental health crisis. 15 And the question becomes, from the outside looking in, is it because of who the opioid crisis is 16 affecting as opposed to crack? Our answer to crack cocaine was mandatory minimum sentences. 17 So the question is, how does an outside observer reconcile how we treated crack and -- which led 18 to mass incarceration, which now with the epidemic, we're losing thousands and thousands of 19 people a year and we're treating it with hugs and kisses and treatment as opposed to tough on 20 crime, lock them up. 21 How do I reconcile that and not conclude that the only difference is race and income? 22 23 SESSIONS: 24 Well, I would say that the federal court focuses on serious offenders, not users. We talk about 25 international drug cartels, we talk about distribution networks, serious gangs, M.S. 13. We focus 26 aggressively on that. 27 But the PSN, the new reinvigorated crime problem focuses more -- and I've been convinced of 28 this -- on the leading criminals in the neighborhood. And the federal government will not seek Document ID: 0.7.15798.13233-000001 20180509-0000866 DOJ-17-0214-C-000147 AMERICAN PVERSIGHT 843 1 mass incarceration so much as we -- we will be focusing on identifying the people who really are 2 the driving force, maybe sucking other young people into crime that would never had been 3 brought in there if they hadn't had this leadership drive. 4 It's worked in New York, it's worked in other agencies and I think it will work here. And 5 Congressman, I would note that the average federal sentence in the last three or four years has 6 dropped 19 percent and the federal prison population is down 14 percent. While we are 7 beginning to see a spike in homicides, the likes of which we hadn't seen since the 1960's. 8 9 GOODLATTE: 10 Time of the gentleman has expired. The Chair recognizes the gentleman from Texas, Mr. 11 Farenthold, for five minutes. 12 13 FARENTHOLD: 14 Thank you, Mr. Chairman. 15 Mr. Attorney General, thank you for being here. Before I got to Congress, I was a computer 16 consultant. So I'm a little -- I sometimes dive into the nerdier end of things. The incursion into 17 the DNC servers is back in the news recently. My question is, can you tell us if anyone at the 18 DOJ, FBI, or any other federal law enforcement agency has been able to take a look and 19 forensically examine that server to determine who hacked it, whether it was the Russians, an 20 inside job, or somebody else? 21 22 SESSIONS: 23 You said the DS... 24 25 FARENTHOLD: 26 DNC. Document ID: 0.7.15798.13233-000001 20180509-0000867 DOJ-17-0214-C-000148 AMERICAN PVERSIGHT 844 1 2 SESSIONS: 3 DNC? I'm not able to the comment on that. It's an ongoing investigation. 4 5 FARENTHOLD: 6 I appreciate that. We've also talked a little bit today about the FISA Court and 702, and 7 surveillance. And one of the things that I don't think has been completely answered is, why does 8 the DOJ think it's so problematic to require a warrant from the FISA Court before -- or any court 9 before accessing or disseminating the contents of communications that aren't related to foreign 10 intelligence that deal with American citizens? 11 12 SESSIONS: 13 Well, the way -- maybe I should explain this. When you have a warrant or you have a 14 surveillance on a foreign individual, that may be connected to terrorism -- or any foreign 15 individual, you listen to who they talk to. And if they call an American and you have a terrorist 16 on the phone in Syria, you want to know who that American is, right? 17 18 FARENTHOLD: 19 But the USA Liberty Act includes exceptions for emergencies and for individuals who are 20 reasonably believed to be engaged in international terrorism or foreign -- or furthering their 21 goals. 22 23 SESSIONS: 24 Well, I'm not sure I understand that. 25 26 FARENTHOLD: 27 There's an exception for dealing with emergencies and people believed to be terrorists. It's the 28 whole -- it's the... Document ID: 0.7.15798.13233-000001 20180509-0000868 DOJ-17-0214-C-000149 AMERICAN PVERSIGHT 845 1 2 SESSIONS: 3 All right, well let me just say this. So if we get a lawful intercept from a Federal Judge of a 4 Mafia person in New York. He is not likely to be talking to many people, not in the United 5 States. And we are listening to the conversations of the people he talks to, and they're American 6 citizens. And if they talk about a crime, you can use that evidence against them and you don't 7 have to have a separate warrant to access it. We're talking about in the 702 -- I hope you'll think 8 through me -- with me now. 9 So, you lawfully obtain this information. We -- you could do it by hand in the old days. But now, 10 the computers do much of the work for us. So you know the names of the people that may be 11 involved in -- in this activity. And you can access those records just like you could access bank 12 records that you got... 13 14 FARENTHOLD: 15 But it would have came up in any other way, you would've had to have gotten a warrant to get 16 that wiretap. 17 18 SESSIONS: 19 Well, the problem with the warrant is, let's say this. Let's say you have information from an 20 airport that somebody wants to lock learn to fly a plane, but does not want to land -- learn how to 21 land the plane, as we saw one time. And -- 22 23 FARENTHOLD: 24 And you go to the court and get a warrant in a matter of hours. 25 26 SESSIONS: 27 That does not give a probable cause to search -- tap that person's phone. Document ID: 0.7.15798.13233-000001 20180509-0000869 DOJ-17-0214-C-000150 AMERICAN PVERSIGHT 846 1 2 FARENTHOLD: 3 All right, I've got a couple other questions... 4 5 SESSIONS: 6 OK. I'm sorry. 7 8 FARENTHOLD: 9 And I appreciate your answer on that. I do want to talk -- in the last Congress, we passed and 10 enacted into law the Stop Advertising Victims of Exploitation Act, or the SAVE Act. This 11 legislation makes it a criminal offense to advertise for commercial sex acts. Has the DOJ used 12 this provision to prosecute online sex traffickers or websites they use, and, if not, why not? 13 14 SESSIONS: 15 I'm not sure about that, Congressman. I'll have to -- maybe can get back to you on that? 16 17 FARENTHOLD: 18 I would -- I would appreciate that. 19 20 SESSIONS: 21 Thank you. 22 23 FARENTHOLD: 24 All right, I've got a couple more here I want to hit, but I'm going to kind of take a step back and 25 look at the big picture. I'm a lawyer. I went to law school. I've always considered the attorney 26 general to be the people's attorney and I feel like over the past few years under previous attorney 27 generals that the attorney general has been more the president's attorney rather than the people's 28 attorney. Document ID: 0.7.15798.13233-000001 20180509-0000870 DOJ-17-0214-C-000151 AMERICAN PVERSIGHT 847 1 Can you tell me what you are doing in office to restore the confidence in the American people, 2 both in the Office of the Attorney General and agencies like the FBI which most people used to 3 have a very high respect for, but I believe that level of respect and trust has dropped dramatically 4 in recent times. 5 6 SESSIONS: 7 These are serious questions. I believe that as you get to know the FBI Director Chris Wray, the 8 new director, you will find him to be a man of high intelligence, great integrity, great character, 9 and great capability. Clearly one of the nation's great lawyers on private practice but many years 10 in the Department of Justice as a prosecutor working with the FBI agents. 11 That's one thing we've got. I can tell you I've got great confidence in him. My deputy, 27 years of 12 professional that I chose to be my primary deputy, my associate Attorney General likewise is a 13 woman of the highest character and academic excellence and experience in the department. And 14 we are setting a tone of professionalism every day in what we do, so I think that's something we 15 need to do. 16 There's some matters that do need to be completed. The Inspector General is doing investigations 17 of some significance, as in my letter I believe you received a copy involving the FBI and the 18 allegations that are there. We intend to make sure that no agency of the government, not just the 19 FBI, is not following the kind of disciplines and practices they should follow. So I guess I would 20 say to you watch what we do. 21 We're not going to be driven by politics. We're going to try to do the right thing and I believe that 22 time will show that to be true. 23 24 FARENTHOLD: 25 I cede. My time is expired. Thank you, Mr. Chairman. 26 27 GOODLATTE: 28 The chair recognizes the gentleman from New York, Mr. Jeffries, for five minutes. Document ID: 0.7.15798.13233-000001 20180509-0000871 DOJ-17-0214-C-000152 AMERICAN PVERSIGHT 848 1 2 JEFFRIES: 3 Mr. Sessions, I have a copy of the transcript of your testimony before the Senate Judiciary 4 Committee in October. You stated under oath, "I don't recall," in some form or fashion 29 times. 5 Is that correct? 6 7 SESSIONS: 8 I have no idea. 9 10 JEFFRIES: 11 I have a copy of the transcript of your testimony before the Senate Intelligence Committee in 12 June. You stated under oath, "I don't recall," in some form or fashion approximately 36 times. Is 13 that correct? 14 15 SESSIONS: 16 I don't know. 17 18 JEFFRIES: 19 In your testimony today you have stated, "I don't recall," at least 20 times, is that fair to say? 20 21 SESSIONS: 22 I have no idea. 23 24 JEFFRIES: 25 Now on October 4th, 2016 during a TV interview with Lou Dobbs you criticized Hillary Clinton 26 for telling FBI investigators, "I can't remember," approximately 35 times. You also stated during 27 that Lou Dobbs interview that the intention failure to remember can constitute perjury. Mr. Document ID: 0.7.15798.13233-000001 20180509-0000872 DOJ-17-0214-C-000153 AMERICAN PVERSIGHT 849 1 Attorney General, do you still believe that the intentional failure to remember can constitute a 2 criminal act? 3 4 SESSIONS: 5 If it's an act to deceive, yes. 6 7 JEFFRIES: 8 Okay, now you testified in January that you had no contact with Russian operatives during the 9 Trump campaign. Earlier today, you testified that your story has quote "never changed." Is that 10 correct? 11 12 SESSIONS: 13 I believe that's fair to say. 14 15 JEFFRIES: 16 OK. 17 18 SESSIONS: 19 I could -- we've added, added things that I did not recall at the time-- 20 21 JEFFRIES: 22 Right. 23 24 SESSIONS: 25 But my statement at the time was my best recollection of the circumstance and as things are 26 brought up-- Document ID: 0.7.15798.13233-000001 20180509-0000873 DOJ-17-0214-C-000154 AMERICAN PVERSIGHT 850 1 2 JEFFRIES: 3 Losing my time, I understand. 4 5 SESSIONS: 6 All right. 7 8 JEFFRIES: 9 Sir, you acknowledge meeting with ambassador Kisleiac during the Republican Nation 10 Convention, correct? 11 12 SESSIONS: 13 I remember I made a speech, he came up to me afterwards. I was standing in front of the speaker 14 (ph), and I did chat with him-- 15 16 JEFFRIES: 17 OK, thank you. And you also-- 18 19 SESSIONS: 20 Then I turned on a meeting. It was just a -- an encounter at that time. 21 22 JEFFRIES: 23 OK, and you also met with the ambassador in September of 2016 in your office, as you've 24 acknowledged, correct? 25 SESSIONS; Yes, one appointment. I had two senior staffers both full of (ph) in the United Sates 26 army retired. And I was in the meeting with-- Document ID: 0.7.15798.13233-000001 20180509-0000874 DOJ-17-0214-C-000155 AMERICAN PVERSIGHT 851 1 2 JEFFRIES: 3 Now you testified -- I'm sorry. You testified in June before the Senate intelligence comity that 4 you had not herd even a whisper about possible Russian involvement in the Trump campaign. 5 Yet we understand that you attended this, March 31st meeting with George Popindoplis. Talked 6 about potential communications with Russian operatives. But also, according to your third 7 quarter 2016 FEC filing, you hosted a Trump campaign dinner meeting on June 30th, 2016 at the 8 Capitol Hill Club, is that right? 9 10 SESSIONS: 11 That's correct, I believe. 12 13 JEFFRIES: 14 And your Senate reelection campaign paid for that meeting, is that right? 15 16 SESSIONS: 17 I -- I think that may be so. 18 19 JEFFRIES: 20 OK, and Carter Page and George Popidopolis both attended that June 30th meeting, correct? 21 22 SESSIONS: 23 That has been reported. 24 25 JEFFRIES: 26 And a that meeting, Carter Page told you that the -- that he was going to Moscow in a few day, is 27 that right? Document ID: 0.7.15798.13233-000001 20180509-0000875 DOJ-17-0214-C-000156 AMERICAN PVERSIGHT 852 1 2 SESSIONS: 3 Yes. 4 5 JEFFRIES: 6 OK, that's -- 7 8 SESSIONS: 9 and he-- 10 11 JEFFRIES: 12 Thank you, thank you-- 13 14 SESSIONS: 15 He said it was a brief meeting as he was walking iut the door, I don't recall that conversation but 16 I'm not able to dispute it. 17 18 JEFFRIES: 19 Understood. Proclaiming my time, I've got limited time available-- 20 21 SESSIONS: 22 That is not -- does that establish a some sort of improper contact? 23 24 JEFFRIES: 25 I think you understand -- I think you understand that-- 26 27 SESSIONS: Document ID: 0.7.15798.13233-000001 20180509-0000876 DOJ-17-0214-C-000157 AMERICAN PVERSIGHT 853 1 He's not Russian either, you know. 2 3 JEFFRIES: 4 You understand sir, I get to ask the questions, you provide the answers in this capacity. You're 5 no longer int he United State's Senate. You voted in 1999 to remove Bill Clinton from office on 6 charges of purgery, correct? 7 8 SESSIONS: 9 That is correct. 10 11 JEFFRIES: 12 The main connections-- 13 14 SESSIONS: 15 The other charges, I -- I voted-- 16 17 JEFFRIES: 18 Simple -- simple question-- 19 20 SESSIONS: 21 For impeachment, yes. 22 23 JEFFRIES: 24 Yes, I understand. To remove him actually, impeachments in the house. And connection with 25 that vote to remove President Clinton from office, you gave this speech on the Senate floor on 26 February 29th, 1999. And in it, you acknowledged that while serving as US attorney, you once 27 persecuted a young police officer who lie din a deposition. And in that speech, you decided to Document ID: 0.7.15798.13233-000001 20180509-0000877 DOJ-17-0214-C-000158 AMERICAN PVERSIGHT 854 1 prosecute that young police officer, even though he corrected his testimony. Now you've (ph) 2 under oath, before the Senate Judiciary Comity in January. 3 You subsequently corrected that testimony in a March 6th written submission. And have been 4 forced repeatedly to come back to the Senate and now the House to clarify. When explaining 5 your vote on the Senate floor, to remove Bill Clinton from office, you stated that you refuse to 6 hold a president accountable to a different standard than the young police officer, who you 7 prosecuted. Let me be clear, the attorney general of the United Sates of America should not be 8 held to a different standard than the young police officer, whose life you ruined by prosecuting 9 him for perjury. I yield back. 10 11 GOODLATTE: 12 The gentleman may respond if he chooses to. 13 14 SESSIONS: 15 Mr. Jeffries, nobody -- nobody, not you or anyone else, should be prosecuted. Not me -- or 16 accused of perjury for answering the question the way I did in this hearing. I've always tried to 17 answer the questions fairly and accurately. 18 But to ask did you ever do something? Do you ever meet with Russians and deal with the 19 campaign? You're saying Mr. Carter Page, who left that meeting -- according to the press reports 20 and all -- and -- and, I guess, his deposition or interview -- is being reported as saying, I'm going 21 to Russia. I made no response to him, didn't acknowledge it. And you're accusing me of lying 22 about that? I say that's not fair, Mr. Jeffries. I would say that's not fair, colleagues. That's not on 23 any indication that I, in any way, participated in anything wrong. 24 And the same with Mr. Papadopoulos, he talked about -- it's reported in the paper that he said 25 something about going to Russia and dealing with the Russians. And I pushed back and said you 26 shouldn't do it. So I don't think I'm -- it is right to accuse me of doing something wrong. I had no 27 participation in any wrongdoing, with regard to influencing in this campaign improperly. Document ID: 0.7.15798.13233-000001 20180509-0000878 DOJ-17-0214-C-000159 AMERICAN PVERSIGHT 855 1 2 GOODLATTE: 3 The Chair recognizes the gentleman from Florida, Mr. Mr. DeSantis, for five minutes. 4 5 DESANTIS: 6 Well, thank you. Mr. Attorney General, you didn't do anything wrong in that testimony. This 7 question was garbled. That's just not giving you any benefit of the doubt at all, to do with these 8 guys are doing to you. So I hear what you're saying and you didn't do anything wrong. 9 I do want to talk about your recusal from the Russian case. You sent -- cited a 28 CFR 45.2, 10 saying you were involved with the campaign, that triggered recusal. However, that regulation 11 only applies to criminal prosecutions or investigations. When you recused yourself under James 12 Comey's admission, that was a counterintelligence investigation not a criminal investigation. So 13 why did you cite that regulation to recuse from a counterintelligence investigation when it's only 14 applicability is for a criminal investigation? 15 16 SESSIONS: 17 I'm not sure that that was expressed to me when I was given advice about it in those terms, 18 number one. Number two, it could likely be interpreted as both and so I -- I felt -- 19 20 DESANTIS: 21 Comey that he -- after you recused, he testified March 20. He said I'm authorized to say there's a 22 counterintelligence investigation. And he was telling the President, you're not under 23 investigation. So that's what -- that's what he said. So I think that that may have been misapplied, 24 but I -- I -- I understand what you're saying -- 25 26 SESSIONS: 27 I did follow the advice I was given. Document ID: 0.7.15798.13233-000001 20180509-0000879 DOJ-17-0214-C-000160 AMERICAN PVERSIGHT