This past week, the Justice Department’s issued a lawsuit against the merger between Time Warner and AT&T. This has caused a showdown that will lead to another attempt at stopping a corporate merger that could cause certain challenges for telecommunications consumers. If the merger were to be approved, it would create a entertainment powerhouse that could allow AT&T to use distributions channels of Time-Warner’s content such as HBO and CNN. However, if rejected, it would set an example of how mergers in the future will be looked at. Both sides believe they have enough context and precedent in the past that could sway the decision to their side.
Much Larger Mergers In The Past Have Been Approved
In the past, the government seldom gets involed in such similar mergers in court, but certain regulators have not avoided getting involved in deals completely. AT&T brings up the similar case in 2011 where Comcast merged with NBC Universal. In the end, the Justice Department approved that merger and the argument that AT&T brings up is that their merger is a lot less significant.
But, the deal regarding Comcast did not come with certain caveats. Regulators made sure to implement certain conditions that were imposed to stop Comcast from using its size to suppress certain competitors such as Netflix. (These conditions will eventually expire in 2018). The senior vice president of Public Knowledge, Harlod Feld, a non profit believes that a potential substitute for antitrust remidies is divesture, that is something that the Obama administration was in favor of.
Consolidation May Be In The Future
But, it seems as if this case will most likely turn into a milestone in antitrust law. If AT&T were to win the case, it would play a part in consolidating the industry and make cases like this much more difficult to win later on.
However, if the merger were to be blocked, it would set the nature of future antirust cases under the Trump administration. Feld says, “This is certainly a signal that the DOJ is going to be much less willing to discuss and is going to claim instead on divestitures”.