Of Burdens of Proof and Heightened Scrutiny James B. Speta* In…

Of Burdens of Proof and Heightened
Scrutiny

James B. Speta*

      In the most recent issue of this journal, Professor Catherine Sandoval
has persuasively argued that using broadcast program-language as the
boundary of antitrust markets is bad economics and suspect policy.1 This
article builds on earlier work by Professor Sandoval in which she analyzes,
and I think quite convincingly criticizes, the Department of Justice's
decision, in reviewing the merger of Univision and Hispanic Broadcasting
Corporation, to define a relevant market as "Spanish-language radio."2 To
my mind, the most convincing aspect of the argument is that those with
broadcasting licenses can easily switch program-language, should any
merger in a language-specific market result in a significant, nontransitory
increase in price.3 Professor Sandoval also contends, with substantial
support, that enough consumers can move between program languages
(because those consumers understand more than just Spanish or just
English) to constrain the ability of any language-specific programmer to
raise prices.4
      The central project of Professor Sandoval's current article, however,
is broader: to argue that the use of such language-specific antitrust market
definitions are not only suspect as economics and policy matters, but also

* Professor, Northwestern University School of Law.

Suggested citation: James B. Speta, Of Burdens of Proof and Heightened Scrutiny, 60 FED.
COMM. L. J. F. 58 (2008), http://www.law.indiana.edu/fclj/pubs/v60/no3/SpetaResponse.pdf.

    1. Catherine J.K. Sandoval, Antitrust Language Barriers:          First Amendment
Constraints on Defining an Antitrust Market by a Broadcast's Language, and its
Implications for Audiences, Competition, and Democracy, 60 FED. COMM. L.J. 407 (2008).
    2. Catherine J.K. Sandoval, Antitrust Law on the Borderland of Language and Market
Definition: Is There a Separate Spanish-Language Radio Market?, 40 U.S.F.L. REV. 381
(2006).
    3. Sandoval, supra note 1, at 458-78; Federal Trade Commission & U.S. Department
of Justice, Horizontal Merger Guidelines § 3 (1997) (discussing possibility of entry into
markets), available at http://www.ftc.gov/bc/docs/hmg080617.pdf.
    4. Sandoval, supra note 1, at 452-58.




                                           58
Number 1]               PROOF AND SCRUTINY                                      59

suspect under the First Amendment. Professor Sandoval argues that some
heightened First Amendment scrutiny is warranted, and rejects the most
highly deferential standards: review under the standards usually applicable
to broadcast regulation; time, place, and manner review; and the
commercial speech doctrine. At a minimum, intermediate scrutiny ­ that
standard of scrutiny applicable to non-content-based speech regulation ­
should apply, although Professor Sandoval seems most drawn to applying
strict-scrutiny, based on her strong view of "[t]he relationship between
language, culture, and content."5 In this regard, Professor Sandoval is
using the First Amendment similarly to the way in which it has been used
over the past 20 years by telephone and cable companies and others in the
communications industries, as "the preferred constitutional assault vehicle
[for] challenging government regulation."6
      While not disagreeing with the underlying conclusion that we should
be quite skeptical of market definitions based on program language, I want
to approach the problem more through the lens of antitrust law and practice
than Professor Sandoval has. I think it undeniable that a statute or a
regulation that placed operational burdens on only those broadcasters
whose programs were in a specific language would and should be subject
to heightened scrutiny. But merger review is not the same as a statute or a
regulation. Merger review is both more case-specific than a statute or a
regulation and more evidence-based. Indeed, the government's conclusion
that a particular merger should not be permitted under the antitrust laws is
not an act of law-creation, but is a predicate to a lawsuit in which the
government bears the burden of proving each of the elements of its case ­
including its proposed market definition. When one considers the
evidentiary burden the government bears in such a case, the notion of
applying "heightened scrutiny" begins to lose coherence ­ especially
against a line of cases in which the Supreme Court has held that the First
Amendment is not implicated by the application of antitrust laws.
      Viewing the problem from the perspective of the antitrust practice in
which it arises also allows us some insight into two broader issues. First, it
requires us to focus on the underlying purpose of "heightened scrutiny" as
a doctrinal construct. In general, from a judicial perspective, government
bears no evidentiary burden when legislating and only a slight burden when
regulating. Heightened scrutiny is designed to shift the burden of proof to
the government in certain cases ­ cases in which we are concerned that the
government may be infringing fundamental liberties. In an antitrust case,
the government already bears the burden of proof and, interestingly, the
elements that it must prove probably ensure that it is not acting in a manner


    5. Sandoval, supra note 1, at 429.
    6. Joseph D. Kearney & Thomas W. Merrill, The Great Transformation of Regulated
Industries Law, 98 COLUM. L. REV. 1323, 1370 (1998).
60        FEDERAL COMMUNICATIONS LAW JOURNAL                        [Vol. 60

that infringes fundamental liberties. Second, focusing on the practices
sheds some light on the institutions involved in media regulation, one of the
toughest areas in which to regulate sensibly.
      My starting point is the merger review process. Under the Hart-Scott-
Rodino process, big mergers are subject to pre-merger clearance by the
Department of Justice or the Federal Trade Commission.7 After an
investigation, which may include depositions or document collection, the
agency decides either to "clear" the merger or to announce that it will bring
suit to block the merger under the Clayton Act (which forbids mergers that
will substantially lessen competition). Unlike merger review under the law
of some other countries, the government's decision that the merger is
illegal does not itself block the merger. Unless the government actually
sues, the parties to the merger may proceed to close the merger within 30
days after they provide whatever information the government has
requested.8
      As Professor Sandoval notes, the government bears the burden of
proof in a suit to enjoin a merger.9 What that means is that the government
must prove its case by a preponderance of the evidence. But if the
government has done so, what does it mean then that the market definition
(or any other part of the case) is subject to "heightened scrutiny"? One
possibility, drawn from civil procedure, is that the government--in cases in
which it relied upon a language-specific market definition--would have to
prove its case by a more stringent standard, such as "clear and convincing"
evidence. In the defamation context, the New York Times v. Sullivan
"actual malice" standard requires clear and convincing evidence.10
      But a number of Supreme Court cases stand in the way of extending a
greater burden of proof to antitrust cases. As a threshold matter, the Court
has long held that the application of laws of general applicability (such as
tax or employment statutes) to those in speech-related businesses raises no
First Amendment issue.11 The antitrust laws are laws of general
applicability, of course. And, in fact, the Supreme Court has rejected the
notion that antitrust cases are subject to a First Amendment defense. In
Associated Press v. United States,12 the government challenged the AP's
exclusive membership rules, and the Court said that "[t]he First
Amendment affords not the slightest support for the contention that a
combination to restrain trade in news and views has any constitutional
immunity."13 Similarly, in FTC v. Superior Court Trial Lawyers Ass'n,14

     7. 15 U.S.C. § 18a.
     8. 15 U.S.C. § 18a(a), (e).
     9. Sandoval, supra note 1, at 446.
     10. 376 U.S. 254, 285-86 (1964).
     11. Leathers v. Medlock, 499 U.S. 439 (1991).
     12. 326 U.S. 1 (1945).
     13. Id. at 20.
Number 1]             PROOF AND SCRUTINY                                    61

the FTC prosecuted a group of lawyers for coordinating a boycott of court
appointments until the government fee was raised. The Court refused to
apply intermediate First Amendment scrutiny, even though the lawyers
engaged in intense publicity and lobbying and were trying to protect
defendants' constitutional right to effective representation: "A rule that
requires courts to apply antitrust laws `prudently and with sensitivity'
whenever an economic boycott has an `expressive component' would
create a gaping hole in the fabric of those laws. Respondents' boycott thus
has no special characteristics meriting an exemption from the per se rules
of the antitrust laws."15
      I think the result would (and should) be the same in a merger case. In
the normal case, the government's proof would establish that language
boundaries are an appropriate market definition and that the merger would
substantially lessen competition in the market in which the merger was
occurring. It follows, therefore, that the government would have proved
that the amount of speech in the affected market will decrease (because this
is one effect of substantially lessening competition). As the Court said in
the AP case, it is odd to use the First Amendment to impede government
action that actually is designed to protect speech markets: "Surely a
command that the government itself shall not impede the free flow of ideas
does not afford non-governmental combinations a refuge if they impose
restraints upon that constitutionally guaranteed freedom . . . . Freedom to
publish is guaranteed by the Constitution, but freedom to combine to keep
others from publishing is not."16 To be sure, Professor Sandoval is
convinced that disallowing mergers in language-specific markets will have
damaging effects in those markets, but, although I am persuaded that the
government's market definition was probably wrong in fact, I am assuming
for the moment that the government proves its antitrust case.
      This does not quite answer, however, the appealing symmetry that
applying heightened scrutiny in merger cases would bring. Statutes and
regulations that apply only to entities in speech markets are subject to at
least intermediate scrutiny, and content-based statutes and regulations are
subject to strict scrutiny. Professor Howard Shelanski has drawn on the
same parallel as Professor Sandoval, saying that "application of the Merger
Guidelines to limit media ownership appears likely to face at least the same
`intermediate' scrutiny under the First Amendment faced by the FCC's
content-neutral regulations, in which case courts will require the
enforcement agencies to provide strong evidence of real harms to justify
blocking a merger."17

    14. 493 U.S. 411 (1990).
    15. Id. at 431-32.
    16. 326 U.S. at 20.
    17. Howard A. Shelanski, Antitrust Law as Mass Media Regulation: Can Merger
Standards Protect the Public Interest?, 94 CALIF. L. REV. 371, 429 (2006).
62        FEDERAL COMMUNICATIONS LAW JOURNAL                                      [Vol. 60

       To my mind, however, heightened scrutiny of statutes and regulations
provides much the same function as placing the normal burden of proof on
the government in merger cases. In general, lawsuits challenging statutes
place no burden of justification on the government: courts simply will not
entertain arguments that statutes are "bad policy." When constitutional
rights are at issue, however, the courts will require the government to
provide evidence justifying the statute ­ but only sometimes. Where
"rational basis" review applies, the courts simply imagine whether the
government policy could be justified on a basis consistent with
constitutional rights.      By contrast, "heightened scrutiny," in First
Amendment cases, identifies those particular statutes as to which the
government bears an evidentiary burden to justify the statute--both as to its
policy and to show that it does not infringe constitutional rights. Professor
Elena Kagan's view, which I think is correct, is that "First Amendment
law, as developed by the Supreme Court over the past several decades, has
as its primary, though unstated, object the discovery of improper
governmental motives. The doctrine comprises a series of tools to flush out
illicit motives and to invalidate actions infected with them."18
       The same is true in administrative law cases, where heightened
scrutiny allows courts to demand more from the agency (usually the FCC)
to support a regulation that implicates speech concerns than the normally
quite-deferential "substantial evidence" standard would.
       Thus, it seems to me that the government's normal burden of proof in
an antitrust case will serve the same purpose as applying heightened
scrutiny. In antitrust cases in which the government can prove a content-
based market definition, it will have met whatever burden of justification
heightened scrutiny would require.19
       But why not apply a greater burden of proof, such as the clear and
convincing evidence standard? Here, we enter a deeper realm of policy
argument, and I can only sketch an answer. Unlike defamation cases,
where First Amendment values exist on only one side of the case, AP
shows how First Amendment values will frequently exist on both sides of
antitrust cases. Blocking a merger may decrease the ability of the subject
companies to pursue expression in precisely the manner that they wish
(although neither company is required to go out of business, for a merger

    18. Elena Kagan, Private Speech, Public Purpose: The Role of Governmental Motive
in First Amendment Doctrine, 63 U. CHI. L. REV. 413, 414 (1996). One need not adopt
Professor Kagan's view that First Amendment law is motivated by concerns over
governmental motive. Even under a view that the First Amendment is motivated by concern
for effects (on either individuals' expressive opportunities or on the quality of speech
markets), heightened scrutiny requires evidence in such cases.
    19. It is, in fact, entirely unclear just how much evidence courts are supposed to insist
on under heightened scrutiny, as a number of commentators have noted. See Neal Devins,
Congressional Factfinding and the Scope of Judicial Review: A Preliminary Analysis, 50
DUKE L.J. 1169 (2001).
Number 1]                PROOF AND SCRUTINY                                          63

will usually be approved if one of the companies will fail in the absence of
the merger20). But a merger that decreases competition in a content-defined
market will increase the price (and/or decrease the availability) of that type
of content--assuming the government can prove its case. And while I
think that Professor Sandoval is probably right that such a content-defined
market is not appropriate on program-language bases, I can easily imagine
other content-based markets in which antitrust would be active. Sports
programming, for example, is one market in which competition issues have
recurred, and, given the limited number of leagues and teams, barriers to
entry may well exist.21
      I do not contend that antitrust law is the best or even the only basis on
which to make good media policy. Professor Shelanski has convincingly
made the case that antitrust law does not pursue the democracy-enhancing
goals that FCC media policy traditionally has taken as its basis, and also
that, given the difficulty of defining markets and measuring competition,
may not even do a very good job of protecting competition in media
markets.22
      Nonetheless, the foregoing does highlight one important institutional
consideration. To the extent that one is concerned about government
regulation in media markets--given the possibility of government
censorship and government error, on the one hand, and the importance of
media on the other--then one may care deeply about the quality of
factfinding in considering whether a merger (or other transaction) should
be permitted. Government factfinding in antitrust cases will be tested by
the adversarial process in a way that lawmaking or even rulemaking rarely
is.23 To be sure, policy must often be made in circumstances in which facts
are unavailable or difficult to find, but the antitrust process, in addressing
individual transactions in a fact-intensive way, has that clear advantage.
      Professor Sandoval's article is quite thought-provoking and is an
important case-study on a particular type of transaction. While I am
somewhat more skeptical of the need for heightened scrutiny in antitrust
cases, the article requires us to think hard about how facts will be found,
and policy will be made, in the difficult area of media regulation.




     20. Merger Guidelines, supra note 3, § 5.
     21. See Ivy Ross Rivello, Note, Sports Broadcasting in an Era of Technology:
Superstations, Pay-per-view, and Antitrust Implications, 47 DRAKE L. REV. 177 (1998).
     22. Shelanski, supra note 17.
     23. Compare Devins, supra note 19 (arguing that judicial deference to congressional
factfinding may not make sense in many cases, because, "while Congress has superior
factfinding capacities, it often lacks the institutional incentives to take factfinding
seriously").