The U.S. Department of Justice filed a lawsuit against AT&T to end its $85.4 billion acquisition of Time Warner. However, AT&T wants to fight for the case in court.
The DOJ mentioned in the charges that the deal disrupts antitrust laws because AT&T would likely “use its control of Time Warner’s popular programming as a weapon to harm competition.” Also, the government claims that the deal “would result in fewer innovative offerings and higher bills for American families.”
AT&T faced this legal challenge after it excluded a request by the Justice Department to deny its DirecTV unit or Time Warner’s Turner Broadcasting which comprises news network CNN in order to win antitrust approval.
The Justice Department also mentioned that AT&T might use Time Warner’s films and movies to force rival pay TV companies to pay “hundreds of millions of dollars more per year for Time Warner’s networks” in its charge filed in federal court in Washington.
AT&T head lawyer David McAtee called the move, ”a radical and inexplicable departure from decades of antitrust precedent.” He said so-called vertical mergers, between companies that are not direct competitors, are “routinely approved.” “We see no legitimate reason for our merger to be treated differently,” McAtee said.
Time Warner’s shares fell 1.1 percent to close at $87.71 and AT&T’s shares were 0.4 percent at $34.64.
McAtee added, “Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. 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.”
AT&T CEO Randall Stephenson during a press conference earlier in the week abruptly disapproved of the DOJ’s decision.
“I’ve done a lot of deals in my career, but I’ve never done one where we have disagreed with the Department of Justice so much on even the most basic of facts. The rule of law is at issue here,” he said.