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Judge Richard Leon’s June 12 decision in United States v. AT&T Inc. contains important insights that will be influential well beyond the confines of the now-completed $80-billion-plus merger between AT&T and Time Warner. This article suggests two such insights for companies and competition lawyers.
First, the AT&T trial is an example of something that is becoming more and more common—a merger happening at a “market inflection point” where companies perceive imminent threats to their business, but government antitrust enforcers do not. In ruling for AT&T, Judge Leon was particularly persuaded by AT&T’s argument that the market for video distribution was being fundamentally changed by “cord cutting” or “cord shaving” and the growth of companies like Netflix, Hulu, and Amazon Prime. The Antitrust Division of the Department of Justice (DOJ), however, came to the litigation with “a dramatically different assessment of the current state of the relevant market and a fundamentally different vision of its future development.” Historically, the government has a mixed record in agreeing with the company that the merger is justified by these imminent threats. It is important, therefore, to note how AT&T’s careful explanation of the changing market convinced the district court that the merger should proceed.