Why the DOJ put the brakes on the AT&T and Time Warnwe merger

[StLucieBengal]

http://www.breitbart.com/big-government/2017/11/09/why-the-department-of-justice-put-the-brakes-on-the-att-time-warner-merger/

Gotta say I am torn on this.... unless we repeal a lot of the regulations we could get stuck with a lack of competition. And in terms of these guys, they could really limit what people see or don’t see.

Quote:Why the Department of Justice Put the Brakes on the AT&T-Time Warner Merger

John Carney9 Nov 2017

AP Photo/Mark Lennihan, REUTERS

50

Critics of the proposed AT&T merger with Time Warner were joined by an unexpected ally this week: the government of the United States.

Until recently, approval for the deal by the Department of Justice was considered a shoe-in. While the government might require some promises about not treating competing media companies unfairly or some sort of net neutrality-style pricing agreement, it was not expected to place any substantial obstacles in the way of the deal.

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By all indications, AT&T would combine Warner Bros, HBO, DirectTV, and CNN–the largest film studio, the largest premium television channel, the largest pay-TV provider, and one of the largest cable news networks–and there was nothing that anyone could do to stop it.

It was a strange set of circumstances, to be sure. Politicians of all sorts were critical of the deal, including Donald Trump, Tim Kaine, Senator Al Franken of Minnesota, Senator Bernie Sanders of Vermont, and Senator Elizabeth Warren of Massachusetts. On the campaign trail in Gettysburg, Pennsylvania, Trump went so far as to say he would block the deal.

But corporate leaders and business columnists told us that the government was unlikely to take significant actions to halt or require a major restructuring of the deal. Somehow the American government was expected to be paralyzed when it came to taking action to block a politically unpopular $85.4 billion deal.

“I kept asking: what happened to the American government that it was suddenly incapable of doing anything to stop this corporate behemoth? Did someone secretly pass a constitutional amendment that protected corporate interests against American democracy?” one former advisor to the Trump campaign who never entered the administration said.

Now we know that the government does indeed believe it has the authority to require serious changes to the merger and perhaps even to block it altogether. The Justice Department has told AT&T that to win approval for the deal it must shed some assets, including giving AT&T a choice of selling DirectTV or CNN and other Turner assets.

Behind the confidence that the deal would be permitted to proceed seems to have been a pair of misconceptions about U.S. antitrust law and the way it is enforced.

For decades the legal community largely considered that the breakup of the original AT&T was badly handled. In large part, this was because it essentially put control of the U.S. telecommunications sector into the hands of the federal judiciary. In reaction, legal scholars and government regulators formed a consensus around the idea that pre-deal structural remedies–requiring businesses to be divested or broken up–were preferable to post-deal behavioral remedies–which often require close government supervision. The Justice Department, for instance, believed it lacked the necessary expertise to effectively implement many behavorial remedies.

This approach was changed by the Obama administration, which was much more comfortable with administrative and judicial monitoring to enforce behavioral results. When Comcast sought approval for its acquisition of NBC Universal, for example, Obama’s Justice Department sued to block the deal. That case ended in a consent agreement in which Comcast accepted certain conditions that limited its behavior but didn’t require any major divestments.

Critics believe that consent agreement has been largely ineffective at discouraging anti-competitive behavior. And, more broadly, many in the legal community are still wary of imposing behavioral remedies on these huge deals, not least because misbehavior can be hard to detect or prove once a deal is completed. Georgetown Law Professor Steven Salop and Clearly Gottlieb Steen & Hamilton attorney Daniel Culley wrote in a 2015 paper “the anticompetitive conduct may not even be elected after-the-fact.”

But many of those who confidently predicted that the AT&T deal would pass muster appear to have believed the Obama-era policy of openness to post-deal, behavioral enforcement would stick. As it turns out, antitrust policy may be undergoing a change in direction in the Trump era, like many other policies enacted by the Obama administration outside of the formal rulemaking process, much less involving actual changes to legislation. Makan Delrahim, the Trump administration’s head of the Justice Department’s antitrust division, has said that he prefers structural remedies to behavioral.

Another error appears to have been the notion that so-called “vertical mergers” were largely immune to challenges. A vertical merger is where a company buys a supplier, such as an automaker buying a parts maker. In horizontal mergers, companies buy competitors who are in the same or very similar business lines.

While horizontal mergers have received the most scrutiny in recent years, there is indeed some very recent precedent for blocking vertical mergers. While Comcast’s attempt to buy Time Warner Cable (the cable provider that was spun off from Time-Warner company AT&T is pursuing now) is sometimes portrayed as a horizontal deal, it was actually a vertical deal, since the two cable providers were not in direct compettition with each other. In general, cable providers seldom compete with each other and enjoy regional monopolies. That deal was blocked in 2015.

One of the red flags that likely brought on the Justice Department’s criticism of the deal is the potential for the merged AT&T Time-Warner conglomerate to freeze out competitors. This could be accomplished by privileging its own content, for example by giving CNN or its other networks beneficial positions in pay-TV bundles or advantageous placement inside cable television menus. Alternatively, the merged company could limit the ability of competitor distributors to carry its networks or impose higher costs.

Another potential problem for the deal is consumer harm considered more broadly. As an integrated content and distribution company, AT&T could flex its muscles by locking out competing sources of news and information from its network. This would limit consumer access to a diversity of viewpoints, which many would consider a harm against the consumer.

The requirement that AT&T choose either to divest itself of CNN or DirectTV would seem to point to this concern about potential restrictions on viewpoint diversity. Without its own news network, AT&T would have no reason to shut out competing news networks. And an independent DirectTV wouldn’t be incentivized to favor one network over the others.

Even more broadly, the deal poses few if any public benefits. Indeed, it’s hard to even identitify a single public benefit from the deal. Given the potential costs in terms of viewpoint diversity and risks of other anticompetitive behavior, those will likely weigh against the deal inside the antitrust division of the Justice Department.

Those familiar with the Justice Department say there is little chance that this has anything to do with the president’s personal war with CNN.

“The idea that DOJ is doing this because Trump calls CNN ‘fake news’ is fake news itself,” one former DOJ employee said.

[BmorePat87]

(11-10-2017, 03:14 PM)StLucieBengal Wrote:  unless we repeal a lot of the regulations we could get stuck with a lack of competition.




  And in terms of these guys, they could really limit what people see or don’t see.    

The struggle is real

[oncemoreuntothejimbreech]

(11-10-2017, 03:14 PM)StLucieBengal Wrote: http://www.breitbart.com/big-government/2017/11/09/why-the-department-of-justice-put-the-brakes-on-the-att-time-warner-merger/

Gotta say I am torn on this.... unless we repeal a lot of the regulations we could get stuck with a lack of competition. And in terms of these guys, they could really limit what people see or don’t see.

But, just 16 hours ago, someone named Lucie claimed the monopolies are created by government regulation.

(11-09-2017, 01:01 PM)StLucieBengal Wrote: Sorry but the only reason we need protections from corporations is because of the monopolies created by the government.

But, this other guy named Lucie claimed we will have a lack of competition witout regulations.

[treee]

For real though, media conglomeration is very present and unpleasant reality. Glad it got struck down but in the grand scheme much more needs to be done.

[StLucieBengal]

(11-10-2017, 05:31 PM)oncemoreuntothejimbreech Wrote: But, just 16 hours ago, someone named Lucie claimed the monopolies are created by government regulation.


But, this other guy named Lucie claimed we will have a lack of competition witout regulations.

The government does create monopolies. Same reason my only option for internet service is Comcast. AT&T is offered in some parts of my area but I am unable to get Verizon. Like I had when I lived in Brandenton.

[StLucieBengal]

(11-10-2017, 04:39 PM)BmorePat87 Wrote:

The struggle is real

Drop all regulations and let them merge.

Letting them merge and keeping regulations that prohibit competition is the issue.

[treee]

It seems like mega-conglomerates are an eventuality in almost any market, and that regulatory intervention is a given over time if you want to avoid them.

[Belsnickel]

(11-10-2017, 05:52 PM)StLucieBengal Wrote: The government does create monopolies. Same reason my only option for internet service is Comcast. AT&T is offered in some parts of my area but I am unable to get Verizon. Like I had when I lived in Brandenton.

Sometimes monopolies are government created, sometimes they occur naturally. Oftentimes, government created monopolies are created to remedy what is already a market failure or because it is a logical process because of infrastructure requirements. Of course, the intention is for these monopolies to be more localized than they have become. Government monopolies at the municipal level are beneficial in a number of ways, but the market and lack of oversight at the federal level has caused behemoth conglomerates to arise and make it so that even municipalities no longer have a real choice.

[Benton]

(11-10-2017, 05:56 PM)treee Wrote: It seems like mega-conglomerates are an eventuality in almost any market, and that regulatory intervention is a given over time if you want to avoid them.

I think that's the nature of business.

If you are successful, generally, your business will grow. The bigger one business gets, it's usually harder for others to be competitive. Unless your competition develops a niche that the bigger business wasn't in... but the bigger one can always adapt their product to cover that, too.

And the bigger a company gets, the bigger the need to diversify. Which tends to lead to a more profitable company, making it even harder for others to compete.

[treee]

(11-13-2017, 01:06 PM)Benton Wrote: I think that's the nature of business.

If you are successful, generally, your business will grow. The bigger one business gets, it's usually harder for others to be competitive. Unless your competition develops a niche that the bigger business wasn't in... but the bigger one can always adapt their product to cover that, too.

And the bigger a company gets, the bigger the need to diversify. Which tends to lead to a more profitable company, making it even harder for others to compete.

A logically sound conjecture.

[StLucieBengal]

(11-10-2017, 08:59 PM)Belsnickel Wrote: Sometimes monopolies are government created, sometimes they occur naturally. Oftentimes, government created monopolies are created to remedy what is already a market failure or because it is a logical process because of infrastructure requirements. Of course, the intention is for these monopolies to be more localized than they have become. Government monopolies at the municipal level are beneficial in a number of ways, but the market and lack of oversight at the federal level has caused behemoth conglomerates to arise and make it so that even municipalities no longer have a real choice.

Thanks for the gov regulations I only have 1 choice for Internet (Comcast) and my tv choices are Comcast or at&t. Sure would be nice to have Verizon fios..... or at least the option.

[Belsnickel]

(11-13-2017, 02:20 PM)StLucieBengal Wrote: Thanks for the gov regulations I only have 1 choice for Internet (Comcast) and my tv choices are Comcast or at&t. Sure would be nice to have Verizon fios..... or at least the option.

I get it, choice is nice. The reason this type of thing is limited is because these companies have to often rely on public infrastructure in order to provide their services. Allowing competing interests to provide services would result in constant utilities work being done to create a patchwork of equipment and wires. It would be a convoluted mess.

At the municipal level, there is very logical and sound reason for restriction of companies in the area to provide services like that. It's just not something most people think of when these things are discussed.

[StLucieBengal]

(11-13-2017, 02:56 PM)Belsnickel Wrote: I get it, choice is nice. The reason this type of thing is limited is because these companies have to often rely on public infrastructure in order to provide their services. Allowing competing interests to provide services would result in constant utilities work being done to create a patchwork of equipment and wires. It would be a convoluted mess.

At the municipal level, there is very logical and sound reason for restriction of companies in the area to provide services like that. It's just not something most people think of when these things are discussed.

If they dropped these regulations wireless companies data plans and hotspot prices would drop because they wouldn’t be limited on speed they could offer.

[Belsnickel]

(11-13-2017, 03:40 PM)StLucieBengal Wrote: If they dropped these regulations wireless companies data plans and hotspot prices would drop because they wouldn’t be limited on speed they could offer.

Eh, these are different regulations than those that create the local monopoly situations. There is an insanely tangled web of regulations when it comes to all of this.

[StLucieBengal]

(11-13-2017, 04:03 PM)Belsnickel Wrote: Eh, these are different regulations than those that create the local monopoly situations. There is an insanely tangled web of regulations when it comes to all of this.

Which is the problem. Honestly I wish they would wipe the slate clean with all these regulations and vote them through congress. Then revote them every decade. This way we can get rid of what doesn’t work instead of piling on top.

[Belsnickel]

(11-13-2017, 04:16 PM)StLucieBengal Wrote: Which is the problem. Honestly I wish they would wipe the slate clean with all these regulations and vote them through congress. Then revote them every decade. This way we can get rid of what doesn’t work instead of piling on top.

Policies that create monopolies at the municipal level are not federal regulations. This is a multi-layered system.

[oncemoreuntothejimbreech]

(11-13-2017, 02:20 PM)StLucieBengal Wrote: Thanks for the gov regulations I only have 1 choice for Internet (Comcast) and my tv choices are Comcast or at&t. Sure would be nice to have Verizon fios..... or at least the option.

Just move to where the jobs providers are.

[StLucieBengal]

(11-13-2017, 05:54 PM)Belsnickel Wrote: Policies that create monopolies at the municipal level are not federal regulations. This is a multi-layered system.

Which they should all be wiped clean. Let’s peel the onion