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DOJ Suit Against AT&T-Owned DirecTV Raises Red Flags in AT&T/Time Warner Merger

November 2, 2016 , , ,

Today, the Department of Justice filed suit against DirecTV, which is now owned by AT&T, alleging that DirecTV engaged in illegal collusive behavior with other pay-TV providers prior to the AT&T/DirecTV merger. AT&T is named as one of the pay-TV providers DirecTV colluded with. AT&T recently announced that it will attempt to acquire Time Warner.

The following can be attributed to John Bergmayer, Senior Counsel at Public Knowledge:

“We're glad to see strong antitrust enforcement from the Department of Justice. The allegations in this complaint demonstrate how difficult is can be for law enforcement to monitor the behavior of large companies. Although thorough enforcement uncovered evidence of wrongdoing in this instance, we should not allow further consolidation that invites this type of behavior across the entire market.

“This case raises obvious concerns about whether AT&T would have the incentive and ability to harm consumers if it were permitted to acquire Time Warner.

“More broadly, this suit is evidence that merger conditions that are designed to control the behavior of large companies can be difficult to enforce. Corporate executives communicate with each other through informal channels and have many opportunities to unlawfully collude or otherwise violate competition law or evade merger conditions. Behavioral merger conditions may be so difficult to enforce that the best path is for the Department of Justice to block deals that would harm competition.”