Nov. 20 (UPI) — The U.S. Justice Department filed a lawsuit Monday challenging a merger between AT&T Inc. and Time Warner Inc.
Makan Delrahim, the head of the department’s antitrust division, said AT&T’s $85.4 billion takeover of Time Warner would harm competition and limit options for consumers.
“This merger would greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy,” Delrahim said.
The lawsuit would be the first time in decades the DOJ has sued to block a so-called “vertical deal” between two companies that aren’t direct competitors.
David R. McAtee II, AT&T’s senior executive vice president and general counsel, issued a statement Monday afternoon questioning the department’s decision to break the longstanding precedent.
“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent,” he said. “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.”
In the deal, AT&T seeks to vertically integrate its wireless and pay-TV capabilities with Time Warner’s video content including Warner Bros. studios and cable channels such as HBO, CNN, TNT and TBS.
AT&T CEO Randall Stephenson said the idea his company would be too powerful after the deal “borders on the comical.”
A federal court judge will determine whether to block the deal by weighing the government’s case against AT&T’s claim its merger with Time Warner will benefit consumers.
“We are confident that the court will reject the government’s claims and permit this merger under longstanding legal precedent,” McAtee said.
President Donald Trump said he would work to block the deal during his campaign and has regularly criticized CNN’s news coverage.
If the lawsuit successfully blocks the deal or AT&T chooses to withdraw in order to avoid the legal battle Time Warner would be entitled to a $500 million breakup fee.