U.S. DoJ Says Ruling Approving AT&T-Time Warner Merger Ignored 'Fundamental Principles of Economics and Common Sense'
Monday August 6, 2018 3:34 pm PDT by Juli Clover
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. 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