Big Day for AT&T, Time Warner and US as Court Rules in Antitrust Case

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What are the possible outcomes?

Judge Leon could block the deal.

Doing so might encourage the Justice Department to act more aggressively when it looks at deals in the future, and might prompt a rethink by companies with similar deals in the works.

A key argument against the government’s case is that the deal is a so-called vertical merger, which means that the two companies do not produce competing products: One makes media content, and the other distributes it. Some big takeovers lately have had similar profiles — the purchase of the insurer Aetna by the drugstore chain CVS, and Amazon’s purchase of Whole Foods — and they typically make it past regulators.

So a win for the government could really shake up some businesses’ plans and open the door for a new definition of antitrust regulation.

He could let it proceed without attaching any conditions.

That would, of course, have the opposite effect. It could be the green light for more vertical takeovers, and would be seen as a setback for the Trump administration.

If the deal is allowed to proceed, Comcast is expected to make a bid for most of 21st Century Fox’s television assets — setting up a bidding war against the Walt Disney Company, which has already struck a deal to buy those holdings.

It’s possible that the Justice Department will appeal a ruling that goes against it, though, so things may not end there.

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He could approve it but attach conditions.

The aim of the conditions would broadly be to keep AT&T from using its control of content like HBO or CNN as a weapon to increase costs for its rivals. The fear is that AT&T could charge rivals a high price for, say, HBO to make AT&T’s own product more competitive.

One way to address this would be to appoint a third party to oversee disagreements between AT&T and the cable companies that want to license Time Warner content. The government doesn’t like that approach.

Another option is to demand that AT&T and Time Warner sell off some plum assets. AT&T and Time Warner don’t like this approach, so would be expected to appeal any such decision.

Doesn’t the government challenge deals all the time?

It’s true that deals get challenged all the time, but the government’s focus in the past has typically been on protecting consumers by keeping one company, or a small group of companies, from owning too much of any one specific industry. It comes up when companies buy their competitors — what’s known as horizontal integration.

For example, in 2016, a federal judge blocked the merger of Staples and Office Depot after the Federal Trade Commission argued that the combination would leave Americans with only one dominant retailer focused on pens, paper clips and Post-it notes.

What makes the AT&T decision noteworthy is that the deal is being challenged even though it doesn’t share all the characteristics of horizontal integration.

“Vertical mergers do not fit the traditional horizontal-merger analytical framework used by the U.S. regulatory authorities,” R. Mark McCareins, a professor at the Kellogg School of Management at Northwestern University, wrote in an online discussion about vertical mergers. It means the trade commission and the Department of Justice “are faced with pounding a square peg into a round hole.”

[Read more: The Time Warner case is not AT&T’s first tangle with U.S. antitrust law.]

Didn’t this get political at one point?

Yup. Time Warner owns CNN, which President Trump has publicly and repeatedly attacked as fake news.

“AT&T is buying Time Warner, and thus CNN,” he said at a campaign rally when the deal was announced. He said it was “a deal we will not approve in my administration.”

The government had said that Mr. Trump did not communicate with antitrust officials on the deal and that their decision to oppose the merger had not been ordered by the White House. During the trial, Judge Leon rejected many of AT&T’s efforts to introduce evidence about political interference into the case.

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