Deal Makers Brace for Ruling in AT&T-Time Warner Case

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Deal Makers Brace for Ruling in AT&T-Time Warner Case


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If the Deal Is Blocked

A victory for the Justice Department could encourage the department to act more aggressively on similar deals.

Makan Delrahim, the antitrust chief at the Justice Department, has been adamant that competitive concerns in mergers cannot be resolved through promises to hold back on certain anticompetitive practices. Those requirements, called behavioral remedies, are common in vertical mergers. Comcast’s merger with NBCUniversal in 2011, for example, was granted with more than 100 conditions, such as a requirement that the combined company give competitors access to its programming.

Instead, Mr. Delrahim has said the best way to resolve antitrust problems is to sell off assets. The department offered AT&T and Time Warner a settlement that would allow them to merge as long as they sold Turner Broadcasting or DirecTV. The companies rejected the proposal, leading to the suit to block the deal.

Establishing his standard as the new norm would send a chill through markets, which had become accustomed to government approval of mergers with restrictions. The investment bankers, public relations operatives and media executives working on deals could go back to their corners.

It would mean the Justice Department could be tougher on mergers and demand companies sell off assets to resolve antitrust concerns.

“Makan Delrahim strongly believes that behavioral remedies are regulations of sorts, and he doesn’t want to turn the D.O.J. into a regulatory agency,” said Paul Glenchur, a senior policy analyst at Hedgeye Potomac Research.

If Conditions Are Placed on a Deal

Judge Leon could also allow the deal but insist that the parties agree to certain conditions, a middle ground that could go in multiple directions.



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