A report claims that the Department of Justice is considering an anti-trust lawsuit that could block AT&T’s $85 billion merger with Time Warner.
Time Warner’s share price dropped 4.1 percent on Thursday morning after the Wall Street Journal reported that the Justice Department is investigating ways in which they can block the merger, which was agreed upon in October 2016.
According to the report, leading business experts suggested that the merger would receive the government’s approval. The Wall Street Journal reported that the “recent developments aren’t necessarily an indication that the deal is in trouble, but they do suggest more regulatory uncertainty for the companies than many analysts anticipated.”
An AT&T spokesman told the Wall Street Journal that the company is confident that the Justice Department will work with them to ensure that the merger can go forward. In July, sources from both companies told CNBC that the deal could close in as soon as in 60 days, but no finalization has been made to this point.
“When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios,” AT&T said in a statement. “For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won’t comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception.”
If the Justice Department sues to block the deal, they will be required to argue in front of a federal judge as to why the merger would harm competition. Analysts have likened the deal to the Comcast and NBCUniversal merger that took place in 2011. In that instance, the government allowed the deal to go through after Comcast agreed to restrictions on its future behavior.
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