One very prominent example of an oligopoly is the cable television industry, with a few companies that control most of the market and provide most of the cable to consumers. Recently, in June, US District Court Judge Richard Leon approved AT&T’s 85 billion dollar acquisition of Time Warner with the goal of bringing together the two prominent media and technology leaders.
While Judge Leon approved of the merger and did not see it as problematic, the US Department of Justice appealed the decision, stating that the judge failed to see that there would be consequences as a result of the merger. With the two companies joining, coming closer to becoming a monopoly and owning a majority of the market share, the company could presumably raise prices for consumers, something that the Department of Justice were worried about in their appeal of the decision. The DOJ was concerned that AT&T could charge companies like Comcast and Dish more for Time Warner while blocking out networks like CNN and TNT and moving them to DirecTV, owned by AT&T. As a result, TV operators might refuse to pay more money and would instead default to DirecTV, only decreasing the competition within the market and increasing AT&T’s monopolistic presence. The joining of a large programming company with a large distribution company would mean that other distribution companies would be put at a disadvantage.
Interestingly, Judge Leon didn’t believe that rival competitors’ concerns were valid in the decision precisely because they were rivals with AT&T, but that raises the question of whether an appeal to limit monopoly with the inherent goal of benefitting one’s own company can still be valid. Also, Leon didn’t believe that DirecTV customers would get lower prices because AT&T would want to maximize their corporate profits as a whole.
In summary, this merger has arguments from both sides about its validity in terms of creating a monopoly that is vertically integrated and causing concern for rival competitors.
Source:
https://www.cnbc.com/2018/08/06/why-the-doj-keeps-going-after-the-att-time-warner-deal.html
Source:
https://www.cnbc.com/2018/08/06/why-the-doj-keeps-going-after-the-att-time-warner-deal.html
I like that you separated this article into two parts. I think that it really benefits when one focuses on the legal aspects of the merger and the other on the negotiations between Dish and HBO. What I really found interesting, however, is the question of whether or not intent matters when appealing a monopoly. Personally, I disagree wit Judge Leon's decision because those most likely to bring up concerns about monopolies are the competitors, because they have the resources to do so and have the most to lose. If competitors wouldn't be able to raise concerns, nobody would at all. Since monopolies are illegal, it doesn't matter who reports them. Even if it means helping another company somewhat, regulating a monopoly is still necessary since it will lower costs and create more options, benefiting the consumer.
ReplyDeleteI really like your post, you clearly separated your thoughts into two different section and covered concerns and problems of the expansion of AT&T. I liked how you covered an opinion of someone who knows about whats happening. I personally don't agree with him because I think that the competitors concerns are valid because it affect them as well and since we are talking abut a monopoly and in theory there should be no competition, the fact there is should be a concern itself.
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