The United States Department of Justice is presently in the process of preparing for a legal battle with AT&T in case it decides to file a lawsuit with the goal of blocking the wireless carrier’s proposed acquisition of Time Warner, The Wall Street Journal reported on Thursday, citing people close to the federal agency. The likelihood of the DOJ proceeding with that course of action remains unclear, with its antitrust division supposedly still exploring the possibility of seeking a compromise with AT&T and settling the matter outside of a courtroom while securing some major concessions from the second largest mobile service provider in the country. While preparing for litigation proceedings is a standard practice employed by the DOJ as part of virtually all of its merger reviews, insiders claim that the agency and AT&T aren’t anywhere near reaching a settlement on the latter’s consolidation attempt worth $85.4 billion.
The latest development stands in stark contrast to AT&T’s repeated public insistence it will have the tie-up approved by the end of the calendar year, with the telecom giant recently having to extend its year-long deadline for concluding the merger. The DOJ’s specific objections to the merger remain unknown, with many industry watchers previously suggesting that the Dallas, Texas-based wireless carrier shouldn’t have major issues with having the deal greenlit by the government under a more business-friendly White House. Recent developments indicate those predictions didn’t come true and it remains to be seen whether AT&T and Washington manage to reach an agreement on the matter in the near future.
AT&T’s previous descriptions of the deal labeled it as a “vertical merger,” the kind of a tie-up that the federal government traditionally approves because it doesn’t eliminate competition from the market. That precedent may not stand any longer if the antitrust division of the agency concludes that even vertical mergers may have monopolistic potential in the internet era in which content creators like Time Warner are heavily reliant on broadband and wireless service providers to deliver their offerings, thus possibly tempting AT&T to discourage its subscribers from consuming content made by its theoretical subsidiary’s competitors through a variety of means. AT&T’s recent financials yielded no particular surprises, with the company stating it’s still in a highly transitional business period, partially due to the pending merger with Time Warner.