Justice Department Will Sue to Stop AT&T-Time Warner Merger


"The combined company will use its control of Time Warner's popular and valuable networks to hinder its rivals, forcing them to pay hundreds of billions of dollars more per year for the right to distribute those networks", a senior DOJ official said.

In an emailed statement Monday, AT&T general counsel David McAtee said the lawsuit is a "radical and inexplicable departure from decades of antitrust precedent" and that the company is confident that a court will reject the government's claims. "AT&T/DirecTV's combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction". The last time the US government won a court victory in a vertical merger antitrust case was in 1972, when the Supreme Court said Ford's takeover of a spark-plug business violated antitrust law. Subsequent reports from Reuters and Politico confirmed the news.

In a press conference after the lawsuit filing, Stephenson remarked, "I'm surprised we're here and troubled by it". Fortunately, the Department of Justice doesn't have the final say in this matter. These internet giants, like the proposed AT&T-DirectTV-Time Warner company that would exist post-merger, are highly vertically integrated, both producing content and distributing it on their streaming services.

Petronelli took issue with the government's understanding of the marketplace, citing Google and, with it, YouTube video service Amazon, Netflix, and Facebook as its likely competitors, in addition to other cable companies.

Consumer advocates and some Democratic politicians applauded the lawsuit as a blow against media consolidation.

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Our merger combines Time Warner's content and talent with AT&T's TV, wireless and broadband distribution platforms.

Earlier this month it was reported that Justice Department officials had demanded that AT&T sell off CNN's parent company from Time Warner as a condition for regulatory approval, raising questions about whether President Trump was intervening in the deal to retaliate against CNN for its critical coverage of him.

The Justice Department said it plans to make a major antitrust announcement Monday afternoon, without specifying the topic.

Delrahim, the antitrust chief, has previously expressed a preference for requiring companies to sell off assets rather than allowing mergers to proceed with conditions on the merged company's behavior.

The suit argues the deal will "substantially lessen competition, resulting in higher prices and less innovation for millions of Americans". Comcast only operates in certain regions. This mirrors AT&T's bid, because it would involve the acquisition of studio businesses as well as cable channels. The over $100 billion merger with AT&T would connect that content empire with the country's largest telecom company and also DirectTV, the country's largest satillite network, which AT&T already owns, creating the potential to increase the costs for competitors that also use Time Warner's content.