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AT&T on Monday called the U.S. Justice Department's lawsuit to block its $85 billion merger with Time Warner “a radical and inexplicable departure from decades of antitrust precedent.”

“Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market,” David McAtee II, senior EVP and general counsel for AT&T, said in a statement. “We see no legitimate reason for our merger to be treated differently."

The DOJ said in a statement Monday afternoon that the combined company would use its control over Time Warner's "valuable and highly popular networks" to force its rivals to pay hundreds of millions of dollars more per year for distribution rights. The department also said that the lawsuit wasn't influenced by President Trump, who has been vocal in his disdain for Time Warner's CNN, or by anyone else in the White House.

“This merger would greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy,” said Assistant Attorney General Makan Delrahim of the department’s Antitrust Division. “AT&T/DirecTV’s combination with Time Warner is unlawful, and absent an adequate remedy that would fully prevent the harms this merger would cause, the only appropriate action for the Department of Justice is to seek an injunction from a federal judge blocking the entire transaction.”

“The merger would also enable the merged company to impede disruptive competition from online video distributors, competition that has allowed consumers greater choices at cheaper prices,” Delrahim added. 

Speaking at a press conference Monday in response to the DOJ challenge, AT&T CEO Randall Stephenson said “obviously we’re surprised to be here, and candidly I’m a bit troubled by it.”

Stephenson contends that the government’s argument that AT&T and Time Warner will have an unlawful market power “denies logic, and is unprecedented.” He pointed to Google and Facebook’s reach and content distribution to billions of customers, comparing it to AT&T’s 25 million TV customers and Turner’s “single-digit share of all media watched.”

The antitrust lawsuit was filed following weeks of back-and-forth over the deal.

In late October, several groups from across the political spectrum banded together to sign a letter to Attorney General Jeff Sessions arguing that AT&T and Time Warner are already “massive media conglomerates” on their own and contending a combined company would be even more powerful in the television market. Earlier this month, reports indicated that antitrust regulators pressed AT&T to sell assets such as Turner — CNN's parent — or DirecTV before approving the merger.
 

“Frankly I don’t know,” whether the antitrust lawsuit is about CNN, Stephenson said at the press conference. However, the question could keep coming up Stephenson contends because of what he calls is an “abrupt change” in the application of antitrust law.

He went on to say that any agreement that results in the company forfeiting CNN, either directly or indirectly, is a “non-starter.”

Analysts, however, told the Associated Press they could not recall examples of vertical mergers blocked by the Justice Department and predicted AT&T would "have a strong case in court.” Wells Fargo Senior Analyst Jennifer Fritzche wrote in a note to investors that nothing about the law or precedent for vertical mergers had changed and the department would “face the same uphill battle in court if it sued to stop it.”

In a statement put out ahead of the DOJ's official announcement AT&T said it's "confident" the deal will go through.

“Our merger combines Time Warner’s content and talent with AT&T’s TV, wireless and broadband distribution platforms. The result will help make television more affordable, innovative, interactive and mobile,” McAtee said. “Fortunately, the Department of Justice doesn’t have the final say in this matter. Rather, it bears the burden of proving to the U.S. District Court that the transaction violates the law. We are confident that the Court will reject the Government’s claims and permit this merger under longstanding legal precedent.”

Stephenson said that as AT&T heads to court it will continue to offer solutions that will allow the transaction to close.

*Story updated to include statement from the DOJ and press conference statements.

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