Summary: The DOJ filed a lawsuit to block AT&T’s takeover of rival Time Warner.
On Monday, the Department of Justice filed a lawsuit to block the merger of AT&T and Time Warner. The deal was worth $85 billion and announced over a year ago, and the DOJ’s move was deemed “unusual” by CNN.
In the lawsuit, the Justice Department argues that AT&T’s takeover of its communications competitor violates antitrust law because AT&T could “use its control of Time Warner’s popular programming as a weapon to harm competition.” Additionally, the government alleges the deal could result in “higher bills for American families.”
“AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner’s networks, and it would use its increased power to slow the industry’s transition to new and exciting video distribution models that provide greater choice for consumers,” the complaint said. “The proposed merger would result in fewer innovative offerings and higher bills for American families.”
AT&T said that it will fight the lawsuit in court.
“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” David McAtee II, AT&T’s general counsel, said in a statement “Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently.”
AT&T CEO Randall Stephenson also criticized the government’s lawsuit, and he implied that President Donald Trump was blocking the merger because Trump hates CNN, which is owned by Time Warner.
“I’ve done a lot of deals in my career, but I’ve never done one where we have disagreed with the Department of Justice so much on even the most basic of facts,” Stephenson said. “There’s been a lot of reporting and speculation whether this is all about CNN, and frankly I don’t know. But nobody should be surprised that the question keeps coming up because we’ve been witnessing such an abrupt change in the application of antitrust law here.”
The AT&T and Time Warner deal was first announced in October of 2016, but a few weeks later, Trump vowed to stop the merger. His promise was viewed as odd because the Republican party is typically business-friendly, but pundits believe Trump wants to hurt CNN, which he frequently calls “fake news” because of their unflattering coverage of him.
“While in the Philippines I was forced to watch @CNN, which I have not done in months, and again realized how bad, and FAKE, it is. Loser!” Trump tweeted last week.
The CNN theory, however, is just a theory and not confirmed. Additionally, liberal groups have been fighting to stop the merger since its announcement, and it could be argued that the DOJ’s intent is nothing more than to protect consumers.
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