A federal judge on June 12, 2018, approved the $85 billion merger between AT&T and Time Warner, rejecting the Department of Justice's assertion that the deal would substantially reduce market competition.
U.S. District Court Judge Richard Leon said the DOJ did not prove that AT&T's acquisition of Time Warner would raise prices for television and internet services and limit consumer choice options in a way that would be "likely to lessen competition substantially." He did not impose conditions on the merger.
"If there ever were an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one," Leon wrote in his 172-page opinion.
The DOJ's antitrust chief, Assistant Attorney General Makan Delrahim, sued last year to block the merger on the grounds that it would give AT&T, which distributes content through its subsidiary satellite television provider DirecTV, an unfair advantage over other companies that also distribute content. The DOJ said AT&T would be able to to charge rival distributors more for Time Warner content, which would likely result in increased prices for consumers.
AT&T and Time Warner argued that the video programming and distribution market was experiencing a revolution, and that they would need to combine content creation with distribution in order to catch up to internet-age technology giants such as Google, Facebook, Amazon, Hulu and Netflix.
AT&T general counsel David McAtee said after the ruling that the company would look to finalize the merger before June 20. The DOJ has not yet announced whether it will appeal the decision.
The merger would serve a major blow to President Donald Trump, who assured supporters that he would not allow it during an Oct. 22, 2016, campaign speech. "As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," Trump said.
The ruling, however, was largely out of Trump's hands.
Trump does not have the authority to approve or deny mergers. "It was a promise he had no business making," said Eleanor Fox, professor of trade regulation at the New York University School of Law and an expert in antitrust law. "This is for the courts, not the president."
He can, however, appoint people to departments in charge of mergers, and he put Delrahim in charge of the DOJ's antitrust division. But Delrahim swore to the court that he was not influenced by the White House, and Leon halted the companies from introducing evidence concerning potential political intervention.
The government could seek a stay of the court's decision to suspend the merger while the case travels through the appeals process. Leon took the unusual step when issuing his decision of urging the government not to seek a stay. He said a stay request would be "manifestly unjust" because the merger agreement is set to expire June 21 and a stay would essentially force this expiration.
The DOJ could also appeal the decision without seeking an injunction, but that would leave open the possibility that AT&T and Time Warner could complete the merger before the appeals process concluded.
DOJ spokesman Jeremy Edwards declined to comment on the government's intentions, pointing instead to a statement issued June 12, 2018, in which Delrahim said the DOJ was disappointed.
"We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner," Delrahim said. "We will closely review the Court's opinion and consider next steps in light of our commitment to preserving competition for the benefit of American consumers."
Fox said there is "virtually no chance of the DOJ winning an appeal" should it seek one, because the decision was rendered on the basis of facts that cannot be reversed. "The role of fact-finding is for the judge of the trial court, and this was the trial court's decision," she said. "Unless there was a serious error made in the fact-finding, the appellate court cannot overturn the finding."
Until we see what the DOJ decides to do next, we will rate this promise Stalled.