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US moves to block AT&T's takeover of Time Warner US moves to block AT&T's takeover of Time Warner
(about 7 hours later)
The US Department of Justice has filed a lawsuit to block telecoms giant AT&T's acquisition of Time Warner, the owner of CNN and HBO.The US Department of Justice has filed a lawsuit to block telecoms giant AT&T's acquisition of Time Warner, the owner of CNN and HBO.
The department said the merger would lessen competition and lead to higher consumer prices. The department said the merger would reduce competition and lead to higher consumer prices.
AT&T vowed to fight the move, calling it a radical departure from US anti-trust practice. AT&T vowed to fight the move, calling it a radical departure from US competition practice.
US President Donald Trump objected to the deal during his campaign last year, fuelling the controversy.US President Donald Trump objected to the deal during his campaign last year, fuelling the controversy.
AT&T chief executive Randall Stephenson said on Tuesday that he thought the acquisition had been on a good path "until recently". AT&T chief executive Randall Stephenson said he thought the acquisition had been on a good path "until recently".
He referred to concerns about possible political influence as the "elephant in the room". President Trump is a vocal critic of CNN which is owned by Time Warner.He referred to concerns about possible political influence as the "elephant in the room". President Trump is a vocal critic of CNN which is owned by Time Warner.
Mr Stephenson said: "There's been a lot of reporting and speculation whether this is all about CNN. And frankly I don't know. Nobody should be surprised the question keeps coming up."Mr Stephenson said: "There's been a lot of reporting and speculation whether this is all about CNN. And frankly I don't know. Nobody should be surprised the question keeps coming up."
In its lawsuit, the Department of Justice claimed that the deal would harm American consumers. 'Higher bills'
In its lawsuit, the Department of Justice claimed that the deal - valued at more than $85bn when it was announced last year - would harm American consumers.
Assistant attorney general Makan Delrahim of the Department of Justice's antitrust division, said: "It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy."Assistant attorney general Makan Delrahim of the Department of Justice's antitrust division, said: "It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy."
The Department of Justice started reviewing the deal after it was announced last year, then valued at more than $85bn. He said the combination would hurt the emergence of new online television options and give AT&T the power to force rival pay TV companies to pay "hundreds of millions of dollars more" for Time Warner content.
The department has also denied political interference.
The decision to take legal action sets up a high-profile fight over US anti-trust law, which has rarely been tested in cases involving companies that do not directly compete.The decision to take legal action sets up a high-profile fight over US anti-trust law, which has rarely been tested in cases involving companies that do not directly compete.
'Concentration of power''Concentration of power'
George Hay, a professor of law and economics at Cornell, said there is "no question" the merger merited serious review of the potential competitive impact. George Hay, a professor of law and economics at Cornell, said there was "no question" the merger's potential competitive impact merited serious review.
However, he said the lawsuit is noteworthy given the president's comments during the presidential campaign. However, he said the lawsuit was noteworthy given the president's comments during the presidential campaign.
"There would be nothing unusual if you didn't have all of this political background," he said."There would be nothing unusual if you didn't have all of this political background," he said.
During his presidential campaign last October, Mr Trump said that the deal would not be approved "in my administration because it's too much concentration of power in the hands of too few".During his presidential campaign last October, Mr Trump said that the deal would not be approved "in my administration because it's too much concentration of power in the hands of too few".
In its lawsuit, the Department of Justice said the merger would give AT&T the power to force rival pay TV companies to pay "hundreds of millions of dollars more" for Time Warner content. But challenges of vertical mergers - when firms operating at different levels within an industry's supply chain combine - have been rare, since at least one of the parties involved must have a major market position to raise concerns, Professor Hay said.
It also said the combination would also hurt the emergence of new online television options and denied that political influence played a role. In the past, competition officials have also been open to settlements in such cases, assuming the deals will create efficiencies that could benefit the consumer. In those cases, companies can merge but face restrictions on their behaviour.
Mr Delrahim, who was appointed by President Trump and confirmed in September, gave a hint of his intention last week. That happened in 2011, when the department allowed a merger between Comcast and NBCUniversal.
In a speech, Mr Delrahim said he did not favour the remedies the anti-trust department has used in the past to curb anti-competitive behaviour. Last year, Mr Delrahim said he did not see major issues with the merger.
He said agreements that allow deals to go ahead, but require ongoing monitoring by the Department of Justice are overly intrusive and hard to enforce.
That so-called behavioural approach was used in 2011 the department allowed Comcast to take over NBCUniversal.
'Radical and inexplicable''Radical and inexplicable'
AT&T denied that the deal would lead to higher charges and said it had been willing to negotiate. AT&T called Monday's lawsuit "a radical and inexplicable departure from decades of antitrust precedent".
AT&T's general counsel David McAtee, said: "Today's DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. The company's general counsel, David McAtee, said: "Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently."
"Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently." AT&T also denied that the deal would lead to higher charges and said it had been willing to negotiate.
Mr McAtee added: "We are confident that the court will reject the government's claims and permit this merger under longstanding legal precedent."
Previously, US media reported that the Department of Justice was pushing AT&T to sell some of its assets as a condition for approval. The options included Turner Broadcasting or its satellite network.Previously, US media reported that the Department of Justice was pushing AT&T to sell some of its assets as a condition for approval. The options included Turner Broadcasting or its satellite network.
Mr Stephenson has said he is unwilling to sell CNN, which is part of Turner.
Professor Hay said it was not clear how the case would fare in court and it could still get resolved with a settlement.
He said it was surprising that the challenge was coming under a Republican administration, since Republicans and their appointees have historically been more business friendly.
But he was "sceptical" the decision to bring the case would turn out to be entirely political, given how much Department of Justice staff prize their independence. If it were, he said, it would harm the department's case.