With AT&T and Time Warner, Battle Lines Form for an Epic Antitrust Case

[elleng]

'If the government goes to court to block the merger of AT&T and Time Warner, as seems increasingly likely, it may well be the antitrust case of the decade, even without the claims of presidential meddling that have already engulfed the deal in partisan controversy.

A lawsuit by the Justice Department, along with its earlier, widely reported demands that AT&T sell either DirecTV or Turner Broadcasting to gain approval for the deal, would mark a radical departure from decades of antitrust enforcement policy, both in defining what is an unlawful anticompetitive merger and in fashioning a remedy to cure the problems.

That’s because the combination of AT&T and Time Warner is what’s known as a “vertical” merger, meaning that the two companies don’t compete to any significant degree in their primary lines of business, which are telecommunications (AT&T) and entertainment (Time Warner). There would be the same number of competitors in both fields after the merger as there were before it.

Court challenges to vertical mergers on antitrust grounds have been extremely rare in recent decades. (Mr. Downes said the most recent example he could find dated to 1964.) But in the past few years, as the internet has disrupted traditional media companies and prompted some high-profile mergers, there has been a growing sense “that antitrust enforcement has been too lenient,” said Maurice Stucke, an antitrust professor at the University of Tennessee College of Law and a co-author of the article “Antitrust and the Marketplace of Ideas.”

Referring to Louis D. Brandeis, the former Supreme Court justice, he said, “There’s a populist, Brandeisian movement that’s rising.”'>>>

https://www.nytimes.com/2017/11/16/business/att-time-warner.html?

[BigmanPigman]

1. Where is Teddy Roosevelt when you need him?

[elleng]

2. Long gone,

but keep reading.

'A study by the Federal Trade Commission found that concerns about every vertical merger examined by the commission from 2006 to 2012 were resolved through “conduct remedies” rather than divestitures, and that all these remedies had been successful at protecting competition.

That hasn’t mollified a new generation of antitrust activists. Tim Wu, an antitrust professor at Columbia University and one of the leading proponents of a more intense scrutiny of media mergers, told me that the deal should be blocked on grounds that a combined megacompany could exert “broad anticompetitive effects.”

Say, for example, that a combined AT&T-Time Warner aggressively raised prices for popular offerings like HBO and CNN. Rival distributors, such as cable companies, would have to pay much higher prices, passing the increases on to consumers, or drop the channels, forcing consumers who want them to turn to other distributors, such as AT&T, reinforcing its already commanding position in satellite, wireless and broadband distribution.

This threat of higher prices and restricted consumer choice appears to be the theory the Justice Department is pursuing, according to people briefed on the negotiations.'

[rurallib]

3. I just can't picture the Trump Justice Department stopping a merger

it seems so out of character for them