The final legal challenge to AT&T's blockbuster purchase of Time Warner was killed earlier today as the Department of Justice saw its complaint against the consolidation shot down by the United States Court of Appeals for the District of Columbia.
The decision was reached full 80 days after stateside prosecutors last presented their case against the Dallas, Texas-based telecom giant. Despite a federal court previously approving the tie-up in an extremely one-sided fashion, dismissing virtually every complaint the prosecution launched against the proposed merger, Washington's officials continued to argue the move would erode competition in a number of industries despite not taking out AT&T's rivals from any of them.
The case of YouTube TV and its unpopular price hikes has been referenced more than once by the state-sponsored team of plaintiffs during the hastened legal proceedings held last year. Ultimately, AT&T won based on precedent which says that vertical mergers are a non-issue for the U.S. court system. Existing competition laws in the country primarily guard against scenarios wherein stale corporate behemoths are buying out innovation threatening their unsustainable business models, not opposing one of the most natural and ubiquitous effects of capitalism – diversified market consolidation.
That's largely theory and while legal precedent allowed AT&T to complete its massive $85.6 billion purchase of the media juggernaut that now goes by the name of WarnerMedia, Washington now apparently did a 180 on the subject of antitrust.
Even as its battle with AT&T was only growing more fiercer by the day, the DOJ signaled little intention to oppose T-Mobile and Sprint's tie-up proposed last year. The duo is still on course toward combining their operations by the end of June in an all-stock deal valued at $26.5 billion which would not only eliminate one of only four relevant wireless carriers in the country in terms of coverage but would also do so while threatening the most unfortunate users of stateside mobile services – prepaid customers such as students, unemployed, and.retirees.
That danger largely comes down to the fact T-Mobile and Sprint are the only major players in the U.S. prepaid market and would have little incentive not to start increasing prices and cutting costs on their offerings in the name of extra profits. Even as both previously pledged to keep prices low, hit various short- and medium-term milestones in terms of net employee adds, and maintain the quality of their services because competition laws would make short work of them otherwise, it's largely those very same laws that would be expected to prevent their consolidation in the first place and were expected to until the Trump administration surprisingly signaled it doesn't take any significant issues with the proposal.
As AT&T already started its efforts to raise prices and accelerate previous ROI estimates, it gave more credence to the DOJ's previously voiced concerns about the Time Warner deal which won't be going anywhere any longer as of today. It now remains to be seen whether federal antitrust officials will also end up being right to take a seemingly relaxed stance on what seems like a much more troublesome merger at first, especially from the perspective of ensuring basic consumer rights are respected in the long term.