Court Approves AT&T-Time Warner Merger

By M. Russo — Published June 13, 2018

Court Approves AT&T-Time Warner Merger

After a six-week trial, a federal judge ruled on Tuesday that AT&T and Time Warner may proceed with their merger. Judge Richard Leon found in favor of the telecom giant, denying the government's claims that such a merger would unfairly lead to higher prices for consumes and would violate antitrust laws.

Last fall, government regulators brought forth the lawsuit as they expect higher prices across the industry would result from this merger. The concern is that AT&T could charge rival distributors, such as Verizon, inflated prices to access Time Warner cable channels. These costs, in turn, would be passed on to consumers. Completing the cycle, customers would then turn to AT&T in order to get lower prices.  

AT&T, on the other hand, has argued that this $85.4-billion deal would allow them to collect valuable consumer data. They could then use this data to sell targeted advertising at a higher price. AT&T claims that it would then be able to lower prices to consumers.

source: gettyimages

When the deal was first announced, then-presidential candidate Donald Trump came out against the it, saying that it would result in too much power "in the hands of too few." Analysts have suggested that Trump's disdain for the deal is due to his dislike of CNN.

Assistant Attorney General Makan Delrahim said, "We continue to believe the pay-TV market will be less competitive and less innovative as a result of the proposed merger."  He said he will weigh next steps in order to protect American consumers. AT&T expects to close the merger by June 20th, which leaves little time if the Justice Department wants to convince a circuit court to issue a stay pending appeal.

The judge did not impose any conditions on this decision. The ruling on this case is likely to open up future mergers and affect the application of antirust regulations, which were designed to protect consumers from predatory business practices. For example, Comcast has been eyeing buying out 21st Century Fox, as has Disney.  Other possible mergers include T-Mobile and Sprint, as well as CVS and Aetna.

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