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Justice Department Sues To Block AT&T's Merger With Time Warner

24 November, 2017, 01:03 | Author: Paula Vaughn
  • DOJ poised to sue AT&T to stop Time Warner merger: report

The suit against AT&T could be the start of a new, more aggressive tack in antitrust by the Justice Department.

AT&T's general counsel, David McAtee, said: "Today's DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent".

AT&T CEO Randall Stephenson said the idea his company would be too powerful after the deal "borders on the comical".

The Justice Department has suggested that AT&T could resolve the case by selling off DirecTV or a Time Warner business that includes CNN, according to a person familiar with the situation who couldn't go on the record.

In 2011, Obama-era antitrust regulators waved through Comcast's acquisition of NBC Universal - a deal that, like the current one, brought together a major provider of television and internet service and an entertainment conglomerate.

The head of the department's anti-trust division, Makan Delrahim, said the merger would "greatly harm American consumers". During the campaign, and since his election, Trump has regularly attacked CNN, calling the network "terrible" and "fake news" at his first press conference after the election.

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But that's not why the Justice Department is suing to block the merger in the U.S. District Court for the District of Columbia. Consumers Union, an advocacy group that opposes the deal, said there were "legitimate reasons" to block the deal to protect consumers, but called reports of political pressure "concerning".

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 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. "It won't bode well for the government if it does", said Dan Petrocelli, a lawyer representing AT&T. It already has a DirecTV Now streaming service, which puts popular live TV networks online, and costs $35 a month and up, cheaper than traditional cable bundles. Just last week, the Federal Communications Commission voted to dramatically loosen local media ownership laws, which will allow the conservative Sinclair Broadcasting to gobble up television and radio stations in the same markets.

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.

'We'll look at breaking that deal up and other deals like that.

The government claims that consumer cable bills will rise if the merger goes through, saying the deal would "substantially lessen competition, resulting in higher prices and less innovation for millions of Americans". Comcast only operates in certain regions. Deals like AT&T's proposed purchase of Time Warner are called vertical mergers because they don't wipe an existing competitor out of the marketplace.

For its part, AT&T sharply rejected the US government's claims.



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