DOJ is suing to stop the merger of AT&T with Time Warner.
You can read about it here.
Yeglesias (Vox writer) is among the many noting the administration's hypocrisy in attempting to block this deal, and they are right to note it.
But I'm with senator Blumenthal (Matt might also be, actually).
While we should be skeptical of the administration, this doesn't mean we should embrace the idea of a handful of mega-corporations that control both the production and distribution of media. As noted in the other thread, the department of justice doesn't do much in the way of litigating antitrust cases, especially in vertical mergers. Which is true, and the result of that is that only a handful of distributors and multimedia conglomerates remain. What happens when more mergers occur in the necessary consequence of lack of enforcement of antitrust laws that subsequent mergers involve corporations that control ever larger shares of their markets, and so on and so on. It might business as usual to allow the merger to go unchallenged, but the consequences add up with every subsequent deal.
Everyone who fundamentally distrusts the administration is right to, but this shouldn't translate to support of unchecked conglomeration. If the question is rightly raised, "why is the administration allowing this merger as they're allowing consolidation of media in local markets?" the answer isn't to allow for more mergers, but protection of diversity in local media.
AT&T and Time Warner should have to demonstrate why consumers benefit from the largest telecommunication company in the world owning the third largest media company, and how they outweigh the risks to consumers. Can you think of the benefits American consumers reaped by allowing Comcast & NBC Universal to merge in 2011? They don't exist. Comcast would argue that consumers would benefit by the Comcast media services that they give preferential treatment over Comcast wires, but that's not a consumer benefit rather an attempt to gain competitive advantage without having to improve their products.
This is not some isolated merger. 21st Century is a name that gets brought up, so let's look at in a different context.
As a growing list of potential buyers explore talks with 21st Century Fox, any deal will hinge on the actions of a powerful player that’s not present at the negotiating table: the Justice Department.
The outcome of the DOJ’s antitrust review of AT&T’s proposed $85.4 billion merger with Time Warner may determine whether media conglomerates like Comcast or Verizon make a bid for some of Fox’s entertainment assets.
If the Trump Administration moves to block the AT&T-Time Warner combination in court, citing anti-competitive concerns, could chill interest in Fox’s entertainment assets, say people familiar with the situation.
A regulatory greenlight would signal to media giants to continue their pursuit of Fox’s assets, including the company’s significant holdings in India and the UK. Negotiations could take as much long as six months to result in an agreement.
The level of uncertainty prompted Wells Fargo’s Marci Ryvicker to issue a report saying she flat-out doesn’t believe a Comcast-Fox deal could be completed as long as the Sword of DOJ Damocles hangs over the media business.
“We just don’t believe it. Period,” she wrote, adding the chances of any “real deal” being completed, are “exceedingly low, especially given the regulatory scrutiny over the pending AT&T-Time Warner deal.”
It's not an isolated case of media companies merging with one another, and telecommunication companies merging with media companies. It's an ongoing trend, and if no one puts a stop to it'll keep happening there'll be a handful of media-comm mega-corps left in the US. There is nothing good for consumers in this and it should come to a stop.
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You can talk about any other anti-trust thing here if you want.
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Reposted for relevance.
I can see how there can local monopoly issues with media distribution but I don’t see that here. The main reason is that there always exists local monopoly problems with cable TV at the consumer side and because of this there is no avenue to refuse sale to competitors in order to create that local monopoly. Do we expect Time Warner to stop carrying Fox? I don’t see that happening given that they don’t leverage the fact that they already carry CNN against Fox now. They need Fox just as much.
So allowing these companies to argue convincingly in court that this block is politically motivated is bad.
Telling them the merger might go through if they sold CNN to some conservative billionaire is very bad.
No, I think there's definitely issues inherent to vertical integration when it involves physical infrastructure. Telecom companies are largely local monopolies already. That is ipso facto anticompetitive, and it's why we have stringent regulation in place on utilities (other than telecoms, I mean - anyone thinking telecom access hasn't reached the same level as electric or water is deluding themselves). The entire point of net neutrality is to prevent telecoms from abusing the power of that monopoly (or, specifically, the monopoly of the service level that arises because they also own the infrastructure - local loop unbundling would drastically curtail the potential for abuse there).
Since Time Warner owns physical infrastructure and the merger involves the content going over that infrastructure it should be under extra scrutiny for that alone, for much the same reasons as ISPs buying stuff up.
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https://www.theverge.com/2016/10/24/13389592/att-time-warner-merger-breakup-bell-system-chart
I don’t see how they interact in a way that is a problem and no one has come up with a method by which the anti-competitive effects are supposed to occur. Everyone says “it’s worrying” or “we should look into it” but not why those things actually produce anti-competitive effects.
Conglomeration isn’t good, but it’s likely a symptom rather than a cause. It’s why most of the conglomerates were broken up (or individualized). This doesn’t create any more single sector consolidation and does not appear to give AT&T extra power over either sector.
If the DoJ had a case on the merits they would have brought it.
The rule not being followed isn't written down and is definitely not a law, but a political consideration. It's the massive amounts of money and lobbying that helped the DoJ develop their habit of not litigating antitrust. The civil staff still do their investigations, but successive administrations and their political staff have decided to allow merger after merger to go through, even after previous mergers showed demonstrable harm to consumers. DoJ will tout their enforcement numbers, which feature many temporary restraints and conditions that corporations seem amenable to, because their borderline cosmetic nature.
So AT&T does have a pretty good public case, that they have not had the fair protection lobbying and donations should presumably bring, and aren't receiving the treatment they should get from a party they've no doubt showered with money. The story of what typically happens isn't the rule of law being protected, but the success of big money lobbying in bending ears.
The "uncertainty" here means uncertainty that they will be challenged by DoJ as they consolidate. As opposed to their previous certainty that they could face minimal resistance, and the CEO takes it for granted that it is obviously bad that the business community doesn't have certainty of DoJ's assent as it pursues M&A.
Even if it's not specifically written down, I'd still call it going against equal protection though. It seems obvious to me that there is a governmental double standard being applied.
Which if the DoJ was objecting on those grounds might make sense. But they want divestment of CNN and Direct TV so those aren't the concerns at all.
I'm pretty sure Time Warner Cable doesn't exist anymore. It was sold to Charter and rebranded as Spectrum, back when Time Warner was trying to merge with Comcast.
I have Spectrum and the TWC branding is still everywhere.
well they sort of need that so the you don't confuse them with the other brands spectrum bought because all the infrastructure is still separate.
Fair enough -- the rebranding hasn't fully taken place (the sale wasn't even two years ago, IIRC). But my point is that I'm pretty certain that Time Warner no longer owns or operates Time Warner Cable or any other ISP.
Edit: Actually, according to the Wikipedia page, Time Warner Cable hasn't been owned by Time Warner since 2009; it was an independent company that licensed the name from its former parent for branding reasons.
I don't think creating a precedent that mergers can be blocked for entirety political / spite reasons is a good. I also don't think, contrary to what the analyst in the OP suggests, that this will lead to a larger change in regulations. Not from an administion that has been gleefully *loosening* merger rules.
Rather I expect all mergers to proceed smoothly until they can be used as tools to punish the companies involved for not toeing the GOP line.
The source that talked to CNN about previous conversation is the one talking about divestment of CNN, but that's what the suit is about. DoJ is objecting on the grounds on of harm that vertical integration brings, Clayton Act violation, and the relief requested is not the divestment of CNN.
None of the stated reasons have anything to do with ISPs. And I think it should be fairly obvious that what it's about isn't always what ends up in court finding. See the Muslim ban.
Basically agree with everything here-
https://www.washingtonpost.com/news/powerpost/paloma/daily-202/2017/11/21/daily-202-seven-reasons-to-be-suspicious-of-the-doj-lawsuit-to-stop-at-t-from-buying-cnn/5a139a5330fb0469e883f6fb/?utm_term=.fa29a9b1ae4c
The head of the department changed his tune after the election and we have enough repeated sources stating that it's about CNN for me to feel confident that's the reason. Again, especially given the pro merger attitude in general.
Clayton specifically references potentially anti-competitive practices which are not claimed here and mergers in which votes are purchased between individuals.
Which does not appear to be the case here.
I didn't say it's about ISP about mergers, rather that it's not about CNN. Specifically, that DoJ is not objecting on the ground that CNN should be spun out. There's a mixing of what ground DoJ is objecting on and the source that talked about CNN as if they're entirely interchangeable. DoJ is objecting on the ground that integration of content creation and distribution will lead to anticompetitive effects.
DoJ is using that as their fig leaf.
I object to the merger, and I also object to the DoJ saying "well CNN is the problem we have" in opposing the merger as well, when there are larger, non-partisan concerns about the merger that should be used as objections.
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It's just as plausible that AT&T's counsel has a huge incentive to selectively leak and portray themselves as the victims of hitherto unseen legal action.
I do object to the administration playing politics and think that, specifically due to those actions, the merger should be allowed.
I *also* think that any government official who approves the merger should be barred from working for those companies for a period of time, specifically because one of the people who approved the Comcast deal was hired by them six months later.
The source locations are cited. They weren't industry sources.
Yes the Clayton Act covers vertical integration, and the suit does claim anti-competitive practices. It's in the filing.
And we are talking about the merits of the case and not simply whether or not the DoJ can make a filing with a claim. Because they can make a filing with any claim they want.
edit: The suit claims anti-competitive effect not anti-competitive practices. These are different things and different portions of the act
It's pretty straightforward. A large shoe manufacturer buying a large shoe retailer would lessen competition because the combined company would have manufacturer-distributor relationship that would give it advantage over other distributors or manufacturers. Likewise an AT&T Time Warner merger would create creator-distributor relationship that would lead to anticompetitive effects, as the complaint lays out.