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DOJ Won’t Seek to Halt AT&T-Time Warner Merger Pending Any Appeal

WASHINGTON — The Justice Department won’t seek to halt AT&T-Time Warner’s plans to merge pending an appeal, meaning that the companies can complete their combination.

The government is said to still be considering whether to appeal the case, but it declined to exercise an option to try to stay the transaction in the meantime. The DOJ had until Monday to decide whether to do so.

U.S. District Judge Richard Leon ruled in favor of AT&T on Tuesday, concluding that the Justice Department had not proved its case that the merger would substantially lessen competition or hurt consumers.

Makan Delrahim, the chief of the Justice Department’s antitrust division, on Wednesday said that “we have put on a case to the best of our ability. Courts speak. There is an appellate process that the Constitution … provides to correct any error.” He added that “we respect that dispute resolution system and move on.”

In a letter to the Justice Department on Thursday, Daniel Petrocelli, lead counsel for the companies, gave a list of a series of representations as to how AT&T plans to operate the Turner networks until Feb. 28, 2019, or until an appeal  or the conclusion of the case.

In that time frame, AT&T said that it would manage Turner as a separate business unit from AT&T Communications, which includes DirecTV and U-verse; that AT&T Communications would have no role in setting Turner’s prices for rival distributors; the number of Turner employees and compensation levels would remain “largely unchanged”; and AT&T would implement a “firewall” between Turner and AT&T Communications to prevent exchange of competitive information of rival programmers and distributors.

The Turner networks, which include CNN, TBS and TNT, were at the heart of the DOJ’s case. They claimed that the increased leverage of the combined company would enable it to extract higher fees from AT&T’s distribution rivals for those channels. Ultimately, according to the DOJ, consumers would face higher prices.

Leon found the DOJ’s evidence unconvincing. He also urged the government not to seek a stay if the purpose was to halt the merger, and made it clear that he was highly unlikely to grant one.

 

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