DoJ seeks to block Time Warner/AT&T merger

The Department of Justice has filed a lawsuit as it tries to block the acquisition of Time Warner by AT&T. The DoJ says that the merger would cause bills to rise and stifle choice for consumers.

There is concern about the level of control such a merger would give the company over programming and distribution, but AT&T says that it will fight the lawsuit, saying that there is no reason for the merger to be blocked.

If it was to go ahead, the merger would involve one of the largest transactions in US history -- $108 billion. But the lawsuit warns that a merged company could "use its control of Time Warner's popular programming as a weapon to harm competition."

The complaint filed by the Department of Justice says:

AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video distribution models that provide greater choice for consumers. The proposed merger would result in fewer innovative offerings and higher bills for American families.

AT&T, of course, disagrees, saying that the lawsuit represents a "radical and inexplicable departure from decades of antitrust precedent." In a statement posted on the company website, AT&T General Counsel David McAtee II says:

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.

Our merger combines Time Warner's content and talent with AT&T's TV, wireless and broadband distribution platforms. The result will help make television more affordable, innovative, interactive and mobile. 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. We are confident that the Court will reject the Government’s claims and permit this merger under longstanding legal precedent.

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