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Justice Department Sues to Block AT&T-Time Warner Merger

Justice Department Sues to Block AT&T-Time Warner Merger
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The U.S. Department of Justice filed a lawsuit on Monday to block AT&T from purchasing Time Warner in an $85.4 billion deal that’s bound to become one of Washington, D.C.’s biggest antitrust cases in decades.

The DOJ is expressing concern that the combined company could charge competitors a premium to distribute Time Warner’s content. That, the department contends, could provide an unfair advantage to AT&T and its subsidiary company, DirecTV. A DOJ official told reporters Modnay that this arrangement could have a “negative impact” on American TV viewers, and could slow the adoption and development of online video and other distribution models, Politico reported.

“This merger would greatly harm American consumers,” said Makan Delrahim, the Justice Department’s antitrust chief. “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”

On the other hand, the case comes in the midst of a political storm. Some have expressed concerns that the Trump administration could be hoping to block the deal because of CNN, a Time Warner-owned media organization that the administration has been highly critical of. The DOJ and the White House, for their part, have denied that CNN plays a role in the decision.

According to the Washington Post, the move is also unusual because the merger involves two different types of companies: a telecom giant with over 100 million cable and wireless subscribers and an entertainment firm that has a vast catalog of films, live TV programming and other media content. This is known as vertical merger, because it doesn’t involve removing a competitor from the market.

“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” AT&T’s head attorney David R. McAtee II said. “We see no legitimate reason for our merger to be treated differently.” In other words, AT&T has made it clear that it would oppose the suit in court.

It’s not just the DOJ that opposes the merger, either. Some anti-consolidation consumer groups, such as Free Pass, have also argued against the deal, siding with content competitors like Starz, Recode reported.

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