U.S. DoJ Says Ruling Approving AT&T-Time Warner Merger Ignored 'Fundamental Principles of Economics and Common Sense'

by

The U.S. Department of Justice today filed an appeal with the District of Columbia Appeals Court protesting the June ruling that allowed the merger between AT&T and Time Warner to move forward, reports The Washington Post.

In the filing, the DoJ says the district court approved the merger after "erroneously ignoring fundamental principles of economics and common sense" and that it used a "deeply flawed assessment of the government's evidence" to reach its decision.

ATT new 2016 logo
According to the DoJ, AT&T's access to Time Warner's content, including the highly important Turner Broadcasting System, which includes CNN, Cartoon Network, TBS, TNT, and other networks, gives it bargaining leverage over rivals, which could drive up access fees, ultimately resulting in higher prices for consumers.

The original ruling approving the merger, says the DoJ, ignored key documents from AT&T on the competitive harm of vertical mergers, limited expert economic testimony, and refused to close the courtroom to allow for testimony related to confidential business information. Further, the DoJ insists the original ruling ignored the economics of bargaining and did not consider corporate profit maximization.

The government established a reasonable probability that the AT&T-Time Warner merger would increase Time Warner's bargaining leverage and, thus, substantially lessen competition, in violation of Section 7 of the Clayton Act.

The district court's contrary conclusion rests on two fundamental analytical errors: it discarded the economics of bargaining, and it failed to apply the foundational principle of corporate-wide profit maximization. These errors colored the court's view of the facts, leading to a decision that is clearly erroneous in light of the evidence presented at trial.

The Department of Justice is asking the appeals court to vacate the district court's ruling and remand the matter for further proceedings.

AT&T and Time Warner completed their merger in June following the judge's ruling that the merger was legal. The Justice Department said at the time that it was disappointed in the court's ruling and would consider its next steps, but allowed the merger to move forward and did not file an emergency stay.

While the merger is finished, the Department of Justice remains able to appeal the judge's ruling and first announced plans to do so back in mid-July.

Shortly after acquiring Time Warner, AT&T announced a new WatchTV service allowing AT&T wireless subscribers with new "AT&T Unlimited &More" and "AT&T Unlimited &More Premium" plans access to more than 30 live channels and 15,000 TV shows and movies on demand.

AT&T's plans are more expensive than previous unlimited wireless plans, but they include WatchTV, which AT&T charges $15 per month for on a standalone basis.

Though AT&T said that its prices would not increase following the merger, it raised prices on its DirecTV Now plans by $5. AT&T also recently raised its administrative fees for postpaid wireless subscribers to $1.99, which some analysts have speculated is to make up for the expense of the Time Warner purchase.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Top Rated Comments

aka777 Avatar
30 months ago

Government protecting consumers. That’s a good one. All their unnecessary regulations causes prices on everything to be tremendously higher than they should be in the first place.

This deal would be blocked in pretty much any other developed country. It's just interesting that free market capitalist types don't seem to grasp the core fundamentals of Capitalism, which is competition. Monopolies and Super-Corporations go against the core principle of Capitalism.

Also, with the exception of America, every single developed country has government bodies looking out for their We the People. The success of this is why today, 19 of the top 20 economies on the planet are Big Gov types.

We can also break this down on a state level, as almost all of the bottom 20 states for GDP per capita, wealth per capita, home prices, incomes, quality of life, poverty, education etc are No Gov Red States. Whereas, the majority of the top 20 states for the above are Big Gov Blue States. Ironically, the biggest welfare recipient states in the Union are also No Gov Red states.
Score: 23 Votes (Like | Disagree)
ActionableMango Avatar
30 months ago

This deal would be blocked in pretty much any other developed country. It's just interesting that free market capitalist types don't seem to grasp the core fundamentals of Capitalism, which is competition. Monopolies and Super-Corporations go against the core principle of Capitalism.

There is plenty of competition to AT&T/DirectTV.

For TV there is free over-the-air antenna, all the cable companies, FIOS, DISH, Amazon, Netflix, Hulu, Sling, iTunes, FandangoNow, VUDU, Crackle, Google Play, Yahoo, Playstation, Microsoft, and even multiple disc-based services.

There is also plenty of cell phone competition. Four nationwide networks AT&T, Verizon, Sprint, and T-Mobile, plus some regional networks like US Cellular, and dozens or hundreds of MVNOs using those networks. Right here in these forums there are plenty of people switching between the carriers all the time. It takes tens of billions of dollars to build a nationwide cellular network, so how many companies do you expect to do that and be able to compete? 5? 6? 15? I'm not even sure 4 is sustainable...Sprint isn't looking too good.


Also, with the exception of America, every single developed country has government bodies looking out for their We the People.

Oh really.

* Why Canadian cell phone bills are among the most expensive on the planet ('https://nationalpost.com/news/canada/why-canadian-cell-phone-bills-are-among-the-most-expensive-on-the-planet')
* Canadians Get Some Of World’s Worst Deals On Wireless Data, Study Finds ('https://www.huffingtonpost.ca/2018/05/08/wireless-data-prices-canada_a_23429799/')
* How Did Australia End Up With Such Ridiculously Slow Internet? ('https://www.forbes.com/sites/millystilinovic/2017/02/14/how-australias-ridiculously-slow-internet-speeds-are-harming-its-residents/#2bd3851afc06')
* Australia Internet slower than Kenya ('https://www.smh.com.au/business/companies/life-in-the-slow-lane-australia-has-slower-internet-than-kenya-20171004-gytril.html')
Score: 9 Votes (Like | Disagree)
Kaibelf Avatar
30 months ago

Government protecting consumers. That’s a good one. All their unnecessary regulations causes prices on everything to be tremendously higher than they should be in the first place.

Nonsense. This is the government interfering with a vertical merger because they want to punish CNN.
Score: 8 Votes (Like | Disagree)
aka777 Avatar
30 months ago

There is plenty of competition to AT&T/DirectTV.

They're actually purchasing the content side with this deal. They're not buying TWC. That means that AT&T will be in control of the distribution, which can and will affect all of the services that you listed.

There is also plenty of cell phone competition.

Not in America, we are about to drop to 3 carriers, which hardly counts as plenty. The largest two American carriers essentially only compete superficially anyway, which is why the American wireless market is ranked as offering one of the worst value in the developed world.

Perhaps you're thinking of Europe or Asia.

Why Canadian cell phone bills are among the most expensive on the planet

They only have 3 carriers.

Canadians Get Some Of World’s Worst Deals On Wireless Data, Study Finds

We basically rank the 2nd worst. We also rank extremely poorly for wireless speeds.

How Did Australia End Up With Such Ridiculously Slow Internet? Australia Internet slower than Kenya

That's disingenuous as the Aussies are building a $50 Billion dollar nationwide wholesale broadband network that allows for any number of competitors. It's pretty much a world first.

Now compare this to the majority of America, which barely has one broadband option. In most American cities, I had a choice of either cable or DSL. I had a good 6+ ADSL 2 options to chose from in Australia + 2 cable networks. Their Mobile networks also rank highly for speed.
Score: 4 Votes (Like | Disagree)
miniyou64 Avatar
30 months ago
Government protecting consumers. That’s a good one. All their unnecessary regulations causes prices on everything to be tremendously higher than they should be in the first place.
Score: 4 Votes (Like | Disagree)
Cigsm Avatar
30 months ago
Lol that’s so cute you think businesses aren’t in business to make as much money as possible and absolutely certainly wouldn’t do everything possible to make every dollar they can.

It’s even cuter you made that comment on an article stating AT&T told the government the merger wouldn’t raise rates and then a month after it was approved they raised rates.

Government protecting consumers. That’s a good one. All their unnecessary regulations causes prices on everything to be tremendously higher than they should be in the first place.

Score: 3 Votes (Like | Disagree)

Top Stories

m1 chip macbook air pro

Kuo: Redesigned MacBooks With Apple Silicon to Launch in Second Half of 2021

Tuesday November 24, 2020 7:53 pm PST by
Apple plans to release additional MacBook models with Apple Silicon in the second half of 2021, according to analyst Ming-Chi Kuo, as part of the company's two-year transition away from Intel processors across its Mac lineup. In a research note today, obtained by MacRumors, Kuo said that these MacBook models will feature a new design. Kuo did not specify which models these will be, but he...
2020 apple shopping event

Apple Offering Up to $150 Gift Card With Select Products on Black Friday Through Cyber Monday

Monday November 23, 2020 2:53 am PST by
Apple has announced its annual four-day shopping event, offering customers up to a $150 Apple Store gift card with the purchase of select products between Black Friday and Cyber Monday in the United States. The gift card values in the United States are as follows: $150 for 16-inch MacBook Pro $150 for 21.5-inch iMac $50 for 13-inch MacBook Pro $50 for MacBook Air $50 for iPhone SE,...
app store christmas icon

Apple Shutting Down App Store Connect From December 23 to December 27

Monday November 23, 2020 10:14 am PST by
Apple shuts down App Store Connect for a week around the holidays each year in an effort to give App Store staff time off from work. This year, App Store Connect will be unavailable from December 23 to December 27. With App Store Connect unavailable, Apple will not accept new apps or app updates, so all pricing changes and new app submissions need to be locked in before those dates for...
Target November Deals 1

Black Friday Spotlight: Target Begins Week-Long Sale With Deals on iPhone 12, Powerbeats Pro, and More

Monday November 23, 2020 8:07 am PST by
We've been tracking early Black Friday deals in our dedicated Black Friday Roundup, and in an effort to prepare our readers for the big shopping event we're highlighting sales store-by-store in the lead-up to November 27. Note: MacRumors is an affiliate partner with Target. When you click a link and make a purchase, we may receive a small payment, which helps us keep the site running....
mac mini macbook pro macbook air

Apple M1 Hands-On Comparison: MacBook Air vs. MacBook Pro vs. Mac Mini

Monday November 23, 2020 3:40 pm PST by
Apple's M1 Macs are out in the wild now, but ahead of the holidays, you might still be trying to figure out which one to pick up, either for yourself or as a gift for someone else. We've got all three of the new Macs available, so we thought we'd give MacRumors readers a hands-on overview of each machine in our latest YouTube video. Subscribe to the MacRumors YouTube channel for more videos. ...
max tech xcode benchmark m1 macbook

Video Demos Performance Differences Between 8GB and 16GB Apple M1 MacBook Pro

Monday November 23, 2020 2:54 pm PST by
All of the M1 Mac models use the same M1 chip, so the upgrade options are limited to SSD storage space and RAM. We haven't seen many comparisons that demonstrate the difference between a machine with 8GB RAM and the upgraded 16GB RAM option, but Max Tech today shared a video highlighting the performance between an 8GB MacBook Pro and a 16GB MacBook Pro. The video includes a series of...
new mac mini logicpro screen

M1 Macs Able to Run Up to Six External Displays Using DisplayLink

Tuesday November 24, 2020 6:53 am PST by
It is possible to run up to six external displays from the M1 Mac mini, and five external displays from the M1 MacBook Air and MacBook Pro, with the aid of DisplayPort adapters, according to YouTuber Ruslan Tulupov. This far exceeds Apple's specified limits on external displays with the M1 Macs. Apple's host of new M1 Macs are not capable of supporting as many external displays as their...
iPads black friday 20 sale feature

Apple Black Friday 2020: Best iPad Deals

Tuesday November 24, 2020 8:51 am PST by
Although we're still a few days away from the official launch of Black Friday, we've known for a few weeks that many retailers would be kicking off discounts ahead of November 27. Because of this trend, today we're tracking discounts across Apple's lineup of iPads, including the 10.2-inch iPad and 2020 iPad Pro. More sales are likely to appear as the week progresses, and when they do we'll update ...
13 16 inch macbook pro air trio

Reliable Leaker Suggests Redesigned MacBooks in 2021 Will Include Both Apple Silicon and Intel Models

Wednesday November 25, 2020 9:15 am PST by
Reliable leaker known as "L0vetodream" has today suggested on Twitter that redesigned MacBooks coming in the second half of 2021 will include models with both Apple Silicon chips and Intel processors. The brief Tweet came in response to a MacRumors article from earlier today, which outlined a report from Ming-Chi Kuo claiming that Apple plans to release redesigned MacBook models with Apple ...
ipad pro 2020 display

Black Friday Week Kicks Off With Up to $150 Savings on 2020 iPad Pro

Sunday November 22, 2020 2:37 pm PST by
As we head into Black Friday week, we're seeing some of the best deals of the season so far, with Amazon and Best Buy today discounting the latest iPad Pro models by up to $150 at the lowest prices we've ever tracked on these models. Note: MacRumors is an affiliate partner with some of these vendors. When you click a link and make a purchase, we may receive a small payment, which helps us keep ...