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June 13, 2018


Years from now when we look back at day before yesterday’s news we may have little to say about how Kim handed Trump his head on a plate in Singapore and a lot to say about a federal judge’s approval of an 85 billion dollar merger of AT&T and Time Warner, a finding which clipped the wings of anti-trust regulators as they face several other large mergers and acquisitions awaiting approval, such as Comcast’s planned bid for merger with 21st Century Fox, CVS’s acquisition of Aetna and others sure to arise given the precedent set day before yesterday. It is also noteworthy that the court approved the AT&T-Time Warner merger day before yesterday without conditions, another green light for new merger and acquisition activity, an activity hardly in need of further stimulation.

The court in announcing its approval without conditions found that the Justice Department failed to provide sufficient proof that the deal would harm competition or consumers and told a packed courtroom that the government’s economic analysis “rested on improper notions.” The court also warned the government not to seek a stay on the merger if it brings an appeal since under the merger agreement AT&T must close its deal with Time Warner by June 20 or pay a penalty of $500 million, which the court said would be “manifestly unjust” to AT&T’s shareholders and the business community.

DOJ’s expert economist says that Americans could be paying an extra $571 million a year for TV if AT&T and Time Warner merge, and that seems to me to do harm to consumers. As for AT&T’s obligation to pay a penalty under the terms of an agreement the two parties made in anticipation of merger, they are big boys with deep pockets and I am sure their lawyers can work out a compromise should the DOJ seek a stay and appeal the district court’s finding, and I cannot see how the DOJ’s legal tactics should be bound to the terms of a contract to which it is not privy.

In any event, even if AT&T were to pay Time Warner a $500 million penalty it would be a one-shot deal, whereas the cost to American consumers could be more than that and payable year after year. To be candid (and I did not hear the evidence), I think the court is overstepping its bounds in advising the DOJ not to seek a stay and appeal, especially since on appeal the appellate court may send the case back with instructions to the same district court judge who advised against stay and appeal, which could create a rather sticky situation.

Companies who wish to merge with or acquire other companies in the same business are said to be engaging in a horizontal activity; such companies when they wish to merge or acquire other companies in different businesses are said to be engaging in a vertical activity. The AT&T – Time Warner merger is a vertical activity and I don’t know how far this merger mania can go in uniting disparate or even similar businesses if restraint and regulation are to be a thing of the past.

Thus shall we have ping pong ball corporations merging with AI corporations? Pharmaceutical companies with Burger King? Are harm to consumers and higher prices the only criteria for refusal to allow mergers and acquisitions, whether vertical or horizontal? At the rate accelerating mergers and acquisitions are being proposed are we ultimately headed for ONE CORPORATION, with branches and subsidiaries, which will control all commerce, finance, production, distribution etc.? If so, how can such a leviathan aggregation of power coexist within a democracy where “all sovereignty rests with the people?” I foresee civil commotion at best.

Perhaps I’m worrying too far in advance of such a possibility but with the merger and acquisition mania at fever pitch and little regulatory restraint perhaps I’m not, since prices are regulated by competition and if there is no competition, guess what happens to prices? To do > Communicate with your members of Congress, set forth your concerns of ultimate monopoly, and agitate for changes in the Sherman Anti-Trust and Clayton Acts so that we can cut such a possibility off at the pass. A continuation of our democracy, tattered as it is from current political attacks, may depend upon it.     GERALD       E



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