Comcast's proposed $45 billion merger with Time Warner might run into a significant roadblock, Bloomberg reports.
Antitrust lawyers with the Department of Justice reportedly are poised to recommend that the agency file suit to prevent the deal from closing. DOJ staffers intend to present their findings to top officials, who will then decide whether to go to court, according to Bloomberg.
News of the potential lawsuit comes the same day a coalition of opponents to the deal asked the Federal Communications Commission -- which also is reviewing the deal -- to nix the merger on the grounds that it will give Comcast too much power.
“The combined company would, among other things: control over half of the high-speed residential broadband connections in the United States; dominate pay-TV across the nation; combine even stronger distribution muscle with NBC-Universal’s 'must-have' video programming; and control critical advertising and set-topbox inputs,” the opponents said today in a letter to FCC Chairman Tom Wheeler.
Critics added that a combined Comcast-Time Warner could use its “massive” Internet network to create a “closed system of preferential treatment for its own content or the content of a select few.”
The 37 signatories include companies like Dish and Cogent and advocacy groups like Free Press and Public Knowledge.
A Comcast spokeswoman said in a statement that there are no grounds for a lawsuit to block the merger, which she said will lead to benefits like “faster broadband speeds” and “access to a superior video experience.”
She adds that the opponents “ignore the fact that there is no reduced competition for consumers.”
But the critics see things differently. They argue that the new company's vastly expanded broadband footprint will in itself change the landscape. Opponents also appear convinced that not even the FCC's recent net neutrality rules will prevent Comcast-Time Warner from using its broadband network to thwart online video competitors like Netflix.
Those rules, which take effect in June, prevent Internet service providers from blocking or throttling traffic and from creating paid fast lanes for companies willing to pay extra. The rules also broadly prohibit ISPs from hindering the efforts of consumers and content companies to reach each other.
Of course, the rules could be vacated by the courts. But the FCC could plan for that contingency by requiring Comcast to follow neutrality regulations as a condition of the merger.
Critics, however, said Comcast can't be trusted to follow conditions “that run counter to its built-in incentives to exploit the new market power it would gain from the proposed merger.”
They added: “This is especially true when the sheer size and scope of a combined Comcast/Time Warner Cable, coupled with its incentive to protect its core video business from innovative 'over-the-top' online video providers, would allow it to threaten nascent competition in so many different ways.”