Antitrust proceedings might not sound like the sexiest spectator sport, but the Department of Justice and hopeful couple AT&T and Time Warner ratcheted up the drama in legal filings on Friday, ahead of their looming showdown in court.
The government floated a conspiracy theory that the combined companies will hold content hostage — Warner Bros. movies and HBO’s “Game of Thrones” would be among the hostages in this scenario — in order to snuff out smaller competitors like YouTube.
Lawyers for AT&T and Time Warner said the DOJ was blithely unaware of the competitive market for video product, and would stifle growth in entertainment media if they successfully block the planned $85 billion merger when proceedings start on March 19.
The DOJ hilariously called the argument “the ‘Star Wars’ defense,” saying AT&T and Time Warner’s assertion that “everything the government is telling the Court is stale and out of context–it is from a long time ago in a galaxy far, far away.”
“Not so,” the filing continued. “To the contrary, as will be shown at trial, the government is challenging this merger to address the real concerns of real people who populate the real marketplace today. And tomorrow as well, since the acquisition would give AT&T a new tool to slow down the development and growth of disruptive online competitors in the future.”
The DOJ implied this scheme to slow competition would be executed alongside fellow giant Comcast and it’s vertically integrated NBCUniversal.
“Unlike an independent Time Warner, the merged firm would share with Comcast a strong interest in slowing or blocking disruptive new entry,” the filing said.
The companies said the rise of streaming services provided by companies like Netflix, Amazon and Google is “pushing all players in the market to respond in numerous ways” to please customers.
“There is no fact-based evidence that this merger will harm competition,” AT&T and Time Warner’s counsel wrote. “Nothing will be withheld from competitors; consumer prices will not go up. To the contrary, the government now concedes it would not be profitable for the new company to withhold its television networks from pay-TV distributors and that the new company’s prices to its own television customers will go down. As a result, the government’s suit to block this merger is not only baseless in fact, but it is affirmatively contrary to consumer welfare, making it difficult for the government even to allege a viable antitrust claim, much less prove one.”
The Justice Department first filed a lawsuit to block the deal in November, arguing that the merger violates antitrust law because it “would result in fewer innovative offerings and higher bills for American families.”
A major motivator of the justice department’s beef with the merger was widely reported to stem from President Donald Trump’s displeasure with CNN, the news network owned by Time Warner property Turner Broadcasting.
Here are five things you need to know about the landmark antitrust case. Read the AT&T-Time Warner brief and the DOJ brief below.
Ashley Boucher contributed to this report.