By Jeffrey May, J.D.
After a month of speculation, the Department of Justice Antitrust Division has pulled the trigger and appealed its loss in its challenge to combination of AT&T Inc. and Time Warner Inc. (U.S. v. AT&T Inc., Case No. 1:17-cv-02511-RJL).
Numerous media reports had surmised that the Antitrust Division would not seek review by the U.S. Court of Appeals in Washington, D.C. of the June 12 decision. However, the government today filed its notice of appeal with the federal district court in Washington, D.C.
AT&T completed its acquisition of Time Warner shortly after the federal district court denied the Antitrust Division’s request to block the deal on antitrust grounds. The government agreed not to seek a stay pending appeal in light of certain commitments from the merger partners. AT&T agreed to "manage the Turner networks as part of a separate business unit, distinct from the operations of AT&T Communications, which includes AT&T’s DIRECTV and U-verse businesses."
In challenging the acquisition, the government argued, among other things, that the acquisition would likely result in a substantial lessening of competition by enabling Time Warner’s Turner Broadcasting cable network to charge AT&T’s rival distributors—and ultimately consumers—higher prices for its content. The district court concluded that the government failed to show that the merger was likely to increase Turner's bargaining leverage.
The appellate court will be tasked with considering the government’s so-called "increased leverage" theory, and possibly the government’s additional theories that the merger creates an increased risk that the combined company will thwart the rise of low-cost virtual multi-channel video distributors that were threatening the pay TV model or will prevent AT&T’s rival distributors from using the Home Box Office cable network as a promotional tool to attract and retain customers.
Attorneys: Craig Conrath for U.S. Department of Justice.
Companies: AT&T Inc.; DIRECTV Group Holdings, LLC; Time Warner Inc.
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