The U.S. Department of Justice has sued to stop the proposed merger between AT&T and Time Warner. The DOJ argues the combined entity would lead to higher TV content prices for consumers. The DOJ also suggests the deal would hurt AT&T/Time’s rivals, “forcing them to pay hundreds of millions of dollars more per year for Time Warner’s networks.” The government agency is open to a settlement with AT&T and Time Warner, but suggests that divestments would be required. AT&T already owns DirecTV, which offers content nationwide via its satellite TV business. AT&T took issue with the lawsuit, calling it “a radical and inexplicable departure from decades of antitrust precedent. 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.” The company argues it is combining a content company with a delivery company, which should preclude it from antitrust regulation as neither is in direct competition with the other. “Fortunately, the Department of Justice doesn’t have the final say in this matter. Rather, it bears the burden of proving to the U.S. District Court that the transaction violates the law,” concluded AT&T. AT&T first proposed the merger in October 2016.
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