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US government loses court case to block AT&T acquisition of Time Warner

GoT dragon

A US Judge has ruled that a case brought by the US government to block AT&T’s acquisition is without merit, so the deal can go ahead.

“We are pleased that, after conducting a full and fair trial on the merits, the Court has categorically rejected the government’s lawsuit to block our merger with Time Warner,” said David McAtee, AT&T General Counsel. We thank the Court for its thorough and timely examination of the evidence, and we compliment our colleagues at the Department of Justice on their dedicated representation of the government. We look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”

So that seems to be that. AT&T can go ahead and buy the company that owns Warner, HBO, etc, for $85 billion, and immediately make itself one of the world’s leading content producers. The main reason behind the US government action was concern about both the content and the means for its delivery being owned by the same company, thus creating the potential for consumers being held to ransom by making access to one conditional on paying for the other.

U.S. District Court Judge Richard Leon decided the US government had failed to prove the acquisition would harm competition and you can read his lengthy reasoning below. But that doesn’t mean there won’t be plenty of opportunities for AT&T to abuse the dominant position this acquisition will put it in. Regulators will need keep a close eye on the situation to make sure that people aren’t obliged to buy massive AT&T bundles just to get hold of Game of Thrones.

There are also broader implications for industry consolidation. Now that the legal precedent has been set, expect other communications and media giants to start casting sidelong glances at each other. “Judge Leon’s decision in AT&T/Time Warner, which forcefully rejects all of DOJ’s proposed theories of vertical harm, makes it much more difficult for the government to challenge future significant vertical mergers,” said Logan Breed, Partner in the Hogan Lovells antitrust team. “This will have an effect on potential future combinations of content providers and content creators, as well as pending mergers in other industries, such as CVS/Aetna.” Light Reading has some more analysis on that side of things here.

 

U.S. District Court Opinion on AT&T by CNBC.com on Scribd


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