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BREAKING NEWS: USA v. AT&T Merger Opinion ONLINE
June 12, 2018
Senior Judge Richard J. Leon of the United States District Court for the District of Columbia denied DOJ's request to enjoin the proposed merger. Imposes no conditions. Denies any stay. Concluded that the government has failed to meet its burden of proof, and characterized the Antitrust Division's arguments against the deal as "fatally anemic" and "gossamer thin." Says:
[T]o use a stay to accomplish indirectly what could not be done directly -- especially when it would cause certain irreparable harm to the defendants -- simply would be unjust. I hope and trust that the Government will have the good judgment, wisdom, and courage to avoid such a manifest injustice. To do otherwise, I fear, would undermine the faith in our system of justice of not only the defendants, but their millions of shareholders and the business community at large.
Page 171 - 172 of the Opinion
The Complaint
United States of America v. AT&T Inc., DirectTV Group Holdings, LLC, and Time Warner Inc. (Complaint, United States District Court for the District of Columbia, 17-CV-02511 / November 17, 2017)
http://brokeandbroker.com/PDF/ATTAntitrustComplaint.pdf
http://brokeandbroker.com/PDF/ATTAntitrustComplaint.pdf
As set forth in the preamble portion of the Complaint:
Read the FULL TEXT of All Pleadings in the DOJ ArchiveAT&T/DirecTV is the nation's largest distributor of traditional subscription television. Time Warner owns many of the country's top TV networks, including TNT, TBS, CNN, and HBO. In this proposed $108 billion transaction -- one of the largest in American history -- AT&T seeks to acquire control of Time Warner and its popular TV programming. As AT&T has expressly recognized, however, distributors that control popular programming "have the incentive and ability to use (and indeed have used whenever and wherever they can) that control as a weapon to hinder competition." Specifically, as DirecTV has explained, such vertically integrated programmers "can much more credibly threaten to withhold programming from rival [distributors]" and can "use such threats to demand higher prices and more favorable terms." Accordingly, were this merger allowed to proceed, the newly combined firm likely would -- just as AT&T/DirecTV has already predicted -- use its control of Time Warner's popular programming as a weapon to harm competition. 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.For these reasons and those set forth below, the United States of America brings this civil action to prevent AT&T from acquiring Time Warner in a transaction whose effect "may be substantially to lessen competition" in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18.
https://www.justice.gov/atr/case/us-v-att-inc-directv-group-holdings-llc-and-time-warner-inc
The District Court Opinion
Senior Judge Richard J. Leon of the United States District Court for the District of Columbia denied DOJ's request to enjoin the proposed merger. Imposes no conditions. Denies any stay. Concluded that the government has failed to meet its burden of proof, and characterized the Antitrust Division's arguments against the deal as "fatally anemeic" and "gossamer thin." Says:
[T]o use a stay to accomplish indirectly what could not be done directly -- especially when it would cause certain irreparable harm to the defendants -- simply would be unjust. I hope and trust that the Government will have the good judgment, wisdom, and courage to avoid such a manifest injustice. To do otherwise, I fear, would undermine the faith in our system of justice of not only the defendants, but their millions of shareholders and the business community at large.
Page 171 - 172 of the Opinion