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Justice Department loses appeal looking to reverse the AT&T–Time Warner merger

Justice Department loses appeal looking to reverse the AT&T–Time Warner merger


Another loss for the agency

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Illustration by Alex Castro / The Verge

The Justice Department has lost an appeal seeking to reverse the merger of AT&T and Time Warner, another defeat for the agency that has repeatedly pressed to stop the massive deal.

After the two companies announced their intention to merge, the Justice Department sued last year to halt the deal, arguing that it would stifle competition. But after a months-long court battle, the department was delivered an ignominious ruling: a judge handed down an extraordinarily one-sided decision in the companies’ favor earlier this year.

Another defeat for the Justice Department

The Justice Department moved to appeal the decision, but allowed the $85 billion deal to move ahead without a fight as the appeals court made its determination.

Today, the panel of judges on the court announced that the department had failed to demonstrate anticompetitive behavior. The decision followed the logic of AT&T, which had argued that upstart competitors like Netflix are providing new competition in the market.

“In this evidentiary context, the government’s objections that the district court misunderstood and misapplied economic principles and clearly erred in rejecting the quantitative model are unpersuasive,” the decision reads. “Accordingly, we affirm.”

The fight has been seen as a test of antitrust enforcement power in an age of consolidation in media and telecommunications. It’s also not the only merger of its kind currently under the microscope: T-Mobile and Sprint have been pushing to merge, in a move that would bring together two of the largest mobile carriers in the industry.

The decision earned the ire of critics of the merger. “The DC Circuit’s decision demonstrates that US antitrust laws and Justice Department merger guidelines are sorely in need of reform,” Gigi Sohn, a former counseler to FCC Chairman Tom Wheeler, said in a statement. “It has become nearly impossible for the government to meet its burden of showing that a merger violates the antitrust laws, especially when it comes to vertical mergers.”

While the Justice Department could appeal the decision further to the Supreme Court, it said in a statement that it would not do so. “We are grateful that the Court of Appeals considered our objections to the District Court opinion,” a spokesperson said. “The Department has no plans to seek further review.”

In a statement, AT&T General Counsel David McAtee argued the merger had “yielded significant consumer benefits.”

“While we respect the important role that the U.S. Department of Justice plays in the merger review process, we trust that today’s unanimous decision from the D.C. Circuit will end this litigation,” McAtee said in the statement.

Update, 4:24PM ET: Includes Justice Department statement.