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