WASHINGTON — A federal judge gave telecom giant AT&T the go-ahead Tuesday to proceed with its $85.4 billion takeover of Time Warner, dealing a stinging defeat to the Trump administration in perhaps the biggest antitrust case in decades.
The Justice Department’s Antitrust Division had sued to stop the deal, arguing it would reduce competition in pay TV in violation of federal antitrust law and force consumers to pay more to stream TV and movies.
U.S. District Court Judge Richard Leon in Washington placed no conditions on the merger, enabling AT&T, the phone and pay-TV giant, to absorb Time Warner, the sprawling media empire that owns CNN, HBO, Warner Bros. movies and numerous popular TV programs.
The highly anticipated, 172-page decision by Judge Leon, an appointee of former President George W. Bush, came after a hard-fought, six-week trial.
“The parties have waged an epic battle, under extremely restricted deadlines, to litigate and try this historic vertical merger case,” Leon wrote. “The court has spoken.”
Leon concluded that “the Government has failed to meet its burden of proof to show that the merger is likely to result in a substantial lessening of competition.”
The judge warned the government against seeking a stay while it considers whether to appeal. He said doing so would be “manifestly unjust” because it would nix the takeover, with a June 21 deadline to close the deal looming.
Dallas-based AT&T has portrayed the takeover as a chance to make inroads in competing with tech heavyweights like Google, Facebook and Netflix.
David McAtee, AT&T’s general counsel, said the company plans to close the deal by June 20.
“We are pleased that, after conducting a full and fair trial on the merits, the court has categorically rejected the government’s lawsuit to block our merger with Time Warner,” McAtee said in a statement. “We thank the Court for its thorough and timely examination of the evidence.” and we look forward to closing the merger on or before June 20 so we can begin to give consumers video entertainment that is more affordable, mobile, and innovative.”
Assistant U.S. Attorney General Makan Delrahim told reporters the government is “obviously disappointed” with the decision and would review it before deciding how to proceed.
“I’ve taken an oath to uphold competition and we’re going to take a review of the opinion and take the next steps as necessary,” Delrahim said.
Later, in a statement, Delrahim said, “We will closely review the Court’s opinion and consider next steps in light of our commitment to preserving competition for the benefit of the American consumer.
“We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner.”
The federal government’s suit appealed to signal a more aggressive approach to antitrust enforcement. Not since the 1970s has the federal government sued to stop a “vertical” merger – in which the companies operate in different industries.
But the decision is widely expected to be construed as a green light for other vertical mergers.
Industry watchers have been intensely focused on the case, which comes at a time when such vertical mergers have become increasingly popular – Verizon’s purchase of AOL and Yahoo, Amazon’s acquisition of Whole Foods, to name a few. And Comcast and Disney are battling it out for control of 21st Century Fox.
AT&T had announced the planned acquisition of Time Warner in October 2016.
The Justice Department sued last year, arguing AT&T, which owns satellite TV company DirecTV, would charge distributors more for Time Warner content, translating to higher costs for consumers.
Outside the courtroom, the case had been shadowed by Trump’s disdain for CNN, which the president has repeatedly called “fake news.”
After the decision, Gary Ginsberg, executive vice president of New York-based Time Warner, released a statement saying: “We are grateful to the court for seeing it the way we did, for recognizing this case was meritless. It was political and should never have been brought in the first place.”
On the campaign trail in October 2016, Trump had said: “As an example of the power structure I’m fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it’s too much concentration of power in the hands of too few.”