AT&T on Tuesday submitted its first legal response to the lawsuit filed by the United States Department of Justice last week in a bid to prevent the second largest wireless carrier in the country from completing its proposed $85.4 billion acquisition of Time Warner. The filing submitted to the U.S. District Court for the District of Columbia that's presiding over the case states that the vertical merger would not only benefit consumers but would do so without harming any of AT&T or Time Warner's rivals as the federal agency previously argued, having used that as the main reasoning for suing to block the deal in the first place.
The Dallas, Texas-based telecom giant said it doesn't dominate "any relevant market" and neither does Time Warner, claiming that the two couldn't possibly establish a video content monopoly even if they wanted because the massive traction gained by online video services in recent years ensures that new competitors keep appearing on a frequent basis. The DOJ's original lawsuit claims there's a notable risk of AT&T using Time Warner's media subsidiaries to force rivaling distributors into paying additional fees for serving their content while simultaneously offering consumers its own services at a discount, hence incentivizing them to ignore alternative solutions in an anti-competitive manner. The wireless carrier also argued that the DOJ is now trying to set an unlawful precedent for vertical mergers that it historically allowed without major concessions, pointing to Comcast's early 2011 acquisition of NBC Universal as the most recent such decision.
The DOJ reportedly asked for significant concessions from AT&T during its antitrust review of the proposed merger, with a number of insiders previously claiming the agency wanted the telecom giant to either sell Time Warner's subsidiary Turner which owns established cable networks like CNN and HBO, or divest its DIRECTV unit which it only acquired in 2015 for $49 billion. In regards to consumer-facing benefits of the merger, AT&T suggested its advertising operations would improve and end up serving more relevant ads to people should its acquisition go through and it's allowed to combine its user data with that held by Time Warner. The dispute has yet to move to trial, with its starting date being set to be decided in the coming weeks.