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The DOJ made the wrong argument.



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If the power of this society really bothered the Department of Justice, why did it present such a narrow case?

Stephanie Keith / Reuters

The $ 85 million merger between AT & T and Time Warner is now officially official. On Tuesday, a panel of federal appeals judges approved the deal, allowing one of the largest Internet, cable and wireless providers in the United States to also become a major content provider. The merger will enable AT & T to realize its plans to build its new subsidiary, WarnerMedia, into a streaming video monster that could include exciting offerings such as HBO, Cartoon Network and box office hits such as than Harry Potter franchise. For critics of media consolidation, the agreement presents a number of potential anti-competitive harms to consumers. AT & T could use access to HBO or CNN as a carrot to convince customers to divest from another broadband provider, or charge more money to other cable providers for accessing to these channels and drive up the prices of its competitors, or stop broadcasting the content of its competitors. These are all assumptions, as argued by the Department of Justice, namely that the merger should be stopped simply because it could raise prices for consumers. Citing a changing landscape that includes competitors such as Netflix and Hulu, the court said it was not convinced.

Had the Department of Justice argued otherwise, and focused on other anti-competitive harms, the challenge may have been more likely to succeed. AT & T and Time Warner do not have the same activity, although there is a symbiotic relationship between a company that owns the pipes and a company that makes the content it carries. This is usually called a vertical merger, which means that the two companies were not competing with each other. But the mere fact that the two companies do not compete directly does not mean that a merger will not leave consumers in a stalemate.

AT & T is entering the content business with no Net Neutrality Policy that would prevent ISPs from blocking or restricting access to websites. Since the Federal Communications Commission revoked the rules of the open Internet last year, AT & T is now free to decide to offer faster access to WarnerMedia's streaming offerings than Netflix – or to bill Netflix more at the same speed – provided you disclose it. This could aggravate the consumer situation and create a harder playing field for young content companies wishing to enter the market but can not afford to pay AT & T to reach users faster.

"The Justice Department has tied at least one hand behind the back when it refused to claim that AT & T could use its power both as a provider of wired broadband Internet access." and mobile to promote Time Warner programming compared to other unaffiliated programs, "Gigi Sohn said. was a special adviser to the former chairman of the Federal Communications Commission, Tom Wheeler, in a statement. It is possible that AT & T was reluctant to assert that it was free to act in a discriminatory manner, because that argument may have contradicted the Trump era FCC, which advocates number of barriers preventing broadband companies from behaving. Yet Sohn said the DOJ could have made an argument in this sense that does not directly affirm the now-repealed rules of the Obama era. The current commission partly justified its new Internet neutrality rules by a means of improving competition by reducing the regulations that FCC President Ajit Pai has claimed that new, dissuaded suppliers enter the market. . Making a company more powerful, like the AT & T and Time Warner merger, does not make it possible to launch a broadband market without network neutrality at a more competitive level.

AT & T wondered if the DOJ trial was politically motivated, given President Trump's repeated criticism of CNN for covering its administration. The Department of Justice denied that Trump's view of the merger was taken into account in his decision to challenge. Regardless of the reasons given by the Justice Department for remaining true to its narrow price arguments, its inability to successfully challenge the merger could be a further setback for future antitrust cases against companies that are not in direct competition. This was the first time since the Nixon administration that the Justice Department was challenging a vertical amalgamation and the law may not reflect the changing landscape of broadband and media, which is increasingly benefiting from a handful huge conglomerates. After all, the AT & T – Time Warner deal has resulted in further mergers, including Disney's acquisition of Twentieth Century Fox.

Importantly, the judges noted in their decision that vertical mergers were not trivial for consumers. "Vertical mergers can create damage beyond higher prices for consumers, including lower product quality and reduced innovation," the decision says. Congress members are becoming increasingly aware of this fact, especially in the House of Representatives. Representative David Cicilline, the new Democratic Speaker of the Antitrust Subcommittee of the House of Representatives of the Judiciary, said in a recent interview that he was interested in a review of the AT & T and Time Warner merger in order to Ensure there is no political interference in the way in which the challenge has been met. .

The AT & T merger takes place in a context in which the vast majority of Americans only have one or two options for high-speed internet, a dynamic that compels us to rely heavily on a very small number of companies to be able to access employment opportunities. , emergency information and ways to communicate with family and friends. It may be years before we know the meaning of broadband providers' inflexibility for our use of the Web, but in the meantime, we see them becoming more powerful in slow motion. If it really bothers Trump's Justice Department, next time he will have to argue his case more deeply.


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