US gov’t to appeal merger go-ahead for AT&T, Warner

The US Department of Justice (DOJ) is to appeal the court decision approving the merger of AT&T and Time Warner in a move that surprised the US telecom giant.

“The Court’s decision could hardly have been more thorough, fact-based, and well-reasoned.  While the losing party in litigation always has the right to appeal if it wishes, we are surprised that the DOJ has chosen to do so under these circumstances.  We are ready to defend the Court’s decision at the D.C. Circuit Court of Appeals,” said AT&T general counsel David McAfee.

The DOJ had argued in court that the merger would have a negative impact on competition in the pay TV market, an argument that was refuted by US District Court judge Richard Leon in a 200-page opinion, who said that the governed had failed to make its case. Leon said the merger could go ahead without conditions.

The merger closed within days of the ruling after the DOJ declined to file for a delay.

Shares of AT&T fell on news that the DOJ had now decided to appeal.

The move will raise speculation about an onward impact on the battle between Comcast and Disney for control of 21^st Century Fox.

Fox last month issued a warning to investors that a deal with Comcast would carry more regulatory risk than one with Disney, even in the wake of the failed DoJ attempt to block the AT&T-Time Warner merger.

Regarding Comcast, the Fox board said that risk factors included “the DOJ’s apparent sensitivity to the potential anticompetitive effects of vertical integration and rejection of behavioural remedies before and after the litigation with respect to the AT&T/Time Warner transaction” and pointed out that the court had not rejected the DOJ’s case “as a matter of law” but because the evidence was insufficient.