Blocking AT&T/Time Warner merger could be 'bad for competition'

Author: John Crabb | Published: 23 Mar 2018

If the Department of Justice (DoJ) is successful in its attempt to prevent AT&T’s $85 billion acquisition of Time Warner, this could have a serious impact across the finance industry. The deal would be the first example of a vertical merger that is successfully blocked by antitrust authorities under section 7 of the Clayton Act.

The Act prohibits the acquisition of stock and assets where the effect 'may be substantially to lessen competition, or to tend to create a monopoly'. This usually applies to horizontal mergers where two competitors in the same industry merge, not vertical mergers where two companies operate at different parts of an industry’s supply chain.

"If the DoJ won, this could change the world radically," said David Bernstein, counsel at Goodwin Procter. "Vertical mergers happen all over the place, IBM built itself by acquiring startups through vertical mergers, Amazon and Whole Foods...