"Appeals court unanimously affirms trial judge ruling last year that allowed merger." - In Brent Kendall's article in the WSJ, the AT&T - Time Warner merger is back on track again. The merger is estimated to be around $80MM, and the overturned decision is one of the biggest losses for the DOJ's anti trust division in nearly a "generation." For some brief background, in November 2017, the Department of Justice filed a lawsuit and challenged the case that claimed the "vertical merger" combined two companies that didn't compete "head - to - head." Spectators wonder if this ruling by the appeals court will affect the probability that the government will intervene in the proposed T-Mobile - Sprint horizontal merger that is currently under review.
Relating to class, this is an interesting and relevant example of the role of the government in the market economy. Under the notion of competitive markets, mergers often times lead to higher government scrutiny in order to avoid monopolies and protect the interests of the consumers and prevent price gouging. Interestingly, this merger is supposed to yield significant consumer benefits for a 'prolonged period of time', as stated by AT&T's counsel. Perhaps synergies between the two companies will lower transaction costs and improve efficiency to benefit consumers. Depending on the administration, I am curious to see how this decision by the appeals court implicates further regulation and government intervention in the M&A space in years to come.
Link:https://www.wsj.com/articles/u-s-appeals-court-rejects-justice-department-antitrust-challenge-to-at-t-time-warner-deal-11551194524
1 comment:
From what I know is that AT&T owns Direct-TV which is a huge cable television and internet provider. Time Warner also represents a huge chunk of cable television and internet providers, especially in the mid west. It is interesting to see the merger go through because now AT&T owns a majority of the cable television industry. The only example that this reminds me of is when Sirius Radio and XM Radio were competing with each other directly for streaming radio service. Due to the competition, both were losing massive amounts of money until neither were profitable. These two companies were allowed to merge and become a monopoly. Because cable is slowly losing traction to alternative streaming services and higher prices, is the merger a last ditch effort to help save the industry. If cable becomes a natural monopoly then prices will be regulated and slowly decrease allowing for much more consumption.
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