The Department of Justice is taking action against the planned merger between telecom giants AT&T Inc. and Time Warner Inc., filing a lawsuit on Monday claiming that the $85.4 billion takeover would grant the newly-formed megacorp to muscle out any and all competition.
“This merger would greatly harm American consumers,” DOJ antitrust division head Makan Delrahim said. “It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”
AT&T and Time Warner were ostensibly shielded from antitrust action since they are not direct competitors. This lawsuit marks the first time in decades that the DOJ has stepped in to block this kind of “vertical deal,” citing the potential risk to consumers as the main reason to step in.
According to AT&T executive brass, the merger will give existing customers access to a much larger library of video content, including a slew of cable channels like HBO, CNN, and TNT and the Warner Bros. Studios catalogue.
AT&T senior executive vice president and general counsel David R. McAtee II pushed back against the decision on Monday, claiming in a statement that the DOJ has no reason to go against the grain with this particular merger.
“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.”
President Donald Trump signaled support for blocking the merger while on the campaign trail in 2016. If blocked – or if AT&T backs down from the tortuous legal battle – Time Warner would be able to command a $500 million breakup fee.