AT&T’s $85 Billion Bid for Time Warner Could Be Challenged by DOJ

The Justice Department is preparing a potential lawsuit in case the government can’t agree on a settlement with the two corporate giants, news reports say.

WASHINGTON — The U.S. Department of Justice is reportedly considering litigation to challenge AT&T’s planned $85 billion deal for Time Warner, according to news reports.

Dow Jones, which reported the news, also said the Justice Department and AT&T are “discussing possible settlement terms that would lead to the deal winning government approval with conditions attached.”

Such arrangements, known as consent decrees, are common for mergers, according to CNNMoney.

“For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market,” an AT&T spokesman said Thursday. “While we won’t comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception.”

The DOJ declined to comment, according to CNNMoney. Time Warner (NYSE: TWX) stock declined more than 3% on Thursday following news the DOJ could sue to block the transaction.

AT&T (NYSE: T) declared its intent to acquire Time Warner more than a year ago. The media company owns CNN, Warner Bros., HBO, TNT and a portfolio of other channels.

The proposed merger is under review by the antitrust division of the DOJ. Dow Jones said the DOJ is “actively considering” an antitrust lawsuit, but said no decision has been made.

CNNMoney reported it is not unusual for the DOJ to negotiate with a company while preparing a potential lawsuit on a parallel track. AT&T said as much in its statement on Thursday.

“When the DOJ reviews any transaction, it is common and expected for both sides to prepare for all possible scenarios,” the company said.

Regulatory agencies in more than a dozen other countries have already approved the deal, according to CNNMoney. The U.S. is the final country from which AT&T needs approval.

AT&T and Time Warner executives have previously said that they expect the deal to close and take effect by the end of the year.

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