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Mergers & acquisitions

DoJ May Sue to Block Comcast-TWC Merger

Bloomberg Business is reporting that the Comcast bid to buy Time Warner Cable will likely face opposition from staff attorneys in the antitrust division of the US Department of Justice. Such opposition could lead to a federal lawsuit against the merger, which would be a major setback for the proposed $45.2 billion deal.

The Bloomberg report says attorneys who have been investigating Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed acquisition are "close" to recommending the merger be blocked "out of concerns that consumers would be harmed." Bloomberg's sources say the recommendation could be filed as early as next week.

A recommendation from staff attorneys is just one step in the process, however, and that would be reviewed by a deputy assistant attorney general for antitrust, who consults with other top DoJ officials on whether the agency should fill a lawsuit to block the deal.

According to Bloomberg, Justice attorneys have been trying to build a potential case for how the deal could harm popular video streaming services, which depend on broadband access to reach consumers. A combined Comcast/Time Warner Cable Inc. (NYSE: TWC) would control 40% of the US broadband market.

— Carol Wilson, Editor-at-Large, Light Reading

Phil_Britt 4/22/2015 | 9:01:18 AM
Re: 40% The Tipping Point? You're right about precedents being set, but too many mergers in various industries leave little remaining in terms of competition and all but make the barrier to entry impenetrable. 
brooks7 4/21/2015 | 1:43:25 PM
Re: 40% The Tipping Point? Dennis,

The DoJ will have a huge problem trying to say that this removes competitors.  TWC and Comcast just don't compete against each other.  I am not saying that I like the combination, but strictly by the rules the number of competitors at a customer location will not change.

seven

Edit:  I should add that I am personally aware of at least 2 mergers that created US Market Share of over 40% in specific markets and passed the DoJ without a whisper of protest.  That kind of precedent will be a problem.
mendyk 4/21/2015 | 11:35:40 AM
Re: 40% The Tipping Point? The word "control" is a bit strong and misleading here. The proposed combined entity would account for 40% of the market, but for the vast majority of that business there would be at least one competitor.
kq4ym 4/21/2015 | 10:41:05 AM
40% The Tipping Point? With a possiblility to "control 40% of the US broadband market" one would think that would be a pretty good indication that there's a big reason to be concerned for consumers. The DoJ though may be subject to some subtle influence in backrooms by lobbyists and politiicians on both side of the argument so it's not a clear cut bet which way the wind will blow on this one.
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