The U.S. Department of Justice on Monday sued to block AT&T's $85 billion merger with Time Warner on the grounds that the deal will decrease competition and result in higher prices for consumers.
"If allowed to proceed, this merger will harm consumers by substantially lessening competition among traditional video distributors and slowing emerging online competition," the DOJ writes in a complaint filed in the U.S. District Court in Washington, D.C. "After the merger, the merged company would have the power to make its video distributor rivals less competitive by raising their costs, resulting in even higher monthly bills for American families. The merger also would enable the merged firm to hinder the growth of online distributors that it views as a threat to the traditional pay-TV model."
AT&T Senior Executive Vice President and General Counsel David McAtee called the lawsuit "a radical and inexplicable departure from decades of antitrust precedent."
He added that the merger "will help make television more affordable, innovative, interactive and mobile."
"We are confident that the Court will reject the Government’s claims and permit this merger under longstanding legal precedent," he stated.
The lawsuit comes two weeks after reports surfaced that the Justice Department wouldn't approve the deal unless AT&T sold CNN and other Turner properties. Those reports sparked concerns that the government was using its power to police antitrust as a pretext to strike at CNN for its news coverage -- which President Donald Trump has repeatedly criticized.
The advocacy group Free Press, which has long opposed the merger, praised the government's move, but also said it hoped the government was acting "for the right reasons."
"This deal would give AT&T way too much power to undercut competitors and raise costs on TV viewers and internet users everywhere," Free Press President and CEO Craig Aaron stated.
He added: “It’s refreshing to see the Justice Department doing something about this deal. However, we remain very troubled by President Trump’s threats to punish outlets like CNN that have aired critical coverage of the administration."
Free Press, like other consumer advocates, previously warned that the merger could leave AT&T positioned to dominate online video distribution. In July, advocates said in a letter to DOJ that AT&T could potentially discriminate against rivals while favoring its own over-the-top video services, by using strategies like excluding its video from consumers' data caps, or prioritizing streams of its video.