AT&T reportedly has reached agreement with the U.S. Department of Justice on conditions to be observed if AT&T completes its acquisition of DirecTV, according to a report by the New York Post.
AT&T wants to acquire DirecTV for $48.5 billion, a move that would gain AT&T 20 million video entertainment customers.
If the report is correct, the DoJ will not oppose the deal on antitrust grounds.
Comcast will face the same sort of scrutiny by DoJ regarding its proposed acquisition of Time Warner Cable.
In both cases, antitrust officials will be analyzing the impact of both deals on the level of competition in the U.S. market.
Ironically, the DoJ might use two different notions of the "relevant market" when making its analysis.
Many would argue that Comcast is correct in stating its acquisition would not affect the level of local competition, since the two firms do not actually overlap in local areas.
But the DoJ analysis will likely focus on the national impact of the deal, not the local impact.
In AT&T’s case, the acquisition actually would remove one video provider on a national basis, but arguably could provide more competition on the local level. So the analysis would be local market impact.
That argument rests in part on the fact that AT&T only operates in 22 of the 50 U.S. states, and is extremely unlikely to get approval to grow its fixed network footprint any further.
On the other hand, by adding a nationwide video capability, AT&T arguably could combine DirecTV with mobile Internet and voice access, to create a nationwide triple play offer that would compete against cable offers and other telco offers on a national basis. And that arguably will increase the amount of effective local competition, though reducing the supplier base by one provider.
In other words, the difference between the two deals is impact on competition nationally, in the case of Comcast, and locally, in the case of AT&T.
If allowed to buy Time Warner Cable, Comcast would have 40 percent share of the U.S. market for high speed access.
Traditionally, a 30-percent threshold has been important in antitrust reviews. Basically, it is rare for any provider to be allowed to obtain market share greater than 30 percent, for any particular service.
So 40 percent share of the strategic and anchor high speed access service is likely to be the issue for Comcast. Even after it acquires DirecTV, AT&T would have less than 30 percent share of the U.S. linear video subscription business, ranking second, after Comcast.
Edited by
Maurice Nagle
