When Makan Delrahim—head of the U.S. Department of Justice’s Antitrust Division—filed a federal lawsuit in November to prevent AT&T’s $85 billion purchase of Time Warner, questions arose as to whether the former White House counsel was unduly influenced by Donald Trump’s seemingly personal vendetta against CNN, a company owned by Time Warner. The DOJ insisted that the suit was to prevent a limited field of competition from occurring should the two companies merge. On Tuesday, the DOJ lost its case.
The New York Times reports that Judge Richard J. Leon of the U.S. District Court for the District of Columbia in Washington, D.C., ruled that the Justice Department had not made its case that the acquisition would mean fewer choices for consumers and higher prices for television and internet services.
The ruling comes just one day after the Federal Communications Commission’s repeal of net neutrality rules went into effect. It paves the way for Disney and Comcast to fight over 21st Century Fox’s assets.
In his remarks during the ruling, Leon urged the government not to do anything—including seeking a stay—that might delay the purchase, but Delrahim made it clear that the DOJ is considering its next steps.
“I have taken an oath to uphold competition,” Delrahim said. “We are going to review the opinion and take the next steps as necessary.”
This merger is unique in that a content distributor is looking to acquire a content creator, something Leon pointed out in his ruling.
“If there ever were an antitrust case where the parties had a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development, this is the one,” he wrote.
Most antitrust lawsuits involve two companies with competing products. In this instance, while the two companies are in a related industry, they are not in competition with each other.
Steven Salop, an economics and law professor at Georgetown University who has pushed for stronger government regulation, told the Times that the decision “will give AT&T market power to raise the price of Time Warner content, and, secondly, it will lead to further vertical mergers in this industry that will harm consumers.”
The timing of this could not be more crucial. After all, we were repeatedly assured that the net neutrality repeal would not change anything.
Yet, things are already changing.