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DOJ says AT&T fails to address errors in court's approval of Time Warner deal

In an ongoing effort to overturn AT&T Inc.'s purchase of Time Warner Inc., the U.S. Department of Justice filed a reply brief in the U.S. Court of Appeals for the District of Columbia Circuit on Oct. 11, outlining the reasons the department believes the deal should not have been approved.

Responding to arguments previously submitted by AT&T in defense of the deal and of the district court judge's decision to uphold the transaction, the Justice Department's antitrust division said AT&T failed to remedy what the government believes were economic and logical errors in the district court ruling. Assistant Attorney General for the Antitrust Division Makan Delrahim said in a statement, "Ultimately, AT&T never resolves the district court's erroneous rejection of the economics of bargaining and the principle of corporate-wide profit maximization, which are the basis of our appeal."

The Justice Department has said the district court improperly discounted the idea that AT&T might engage in anticompetitive behavior by withholding Time Warner programming from competing distributors, sacrificing Turner advertising dollars and affiliate fees, to benefit its own distribution platforms.

"AT&T unsuccessfully attempts to justify the district court's conclusion that Time Warner would not bargain with DirecTV's interests in mind," the department said in its reply brief, adding that the merger of AT&T's DIRECTV satellite video business and Time Warner's collection of cable networks gives the combined entity the "incentive and ability to hold out for more money and thus alter the outcome of the negotiations."

In seeking to block the deal, the DOJ has repeatedly argued the combination would give the resulting entity too much power in the pay TV and online video marketplace, leading to higher prices and fewer choices for consumers. AT&T has disputed that claim, saying the deal will result in lower prices for consumers through the introduction of new services, such as the $15-a-month WatchTV streaming offering, and improved advertising capabilities. AT&T closed the deal June 14. The DOJ is appealing the district court ruling in an accelerated timeline, a move that could allow the appeals court to reach a decision in early 2019.