AT&T-DirecTV Merger Would Stifle Competition

**Editor’s Note: Please click here for a recap of the biggest communications mergers in Q2 2014.**

AT&T’s acquisition of DirecTV would violate merger guidelines used by the federal government in 64 markets, raising competitive concerns, a public interest group argued last week in a regulatory filing.

In reliance on an index used by the U.S. Justice Department, the national organization Free Press said the merger would decrease competition and result in a number of highly concentrated markets. In 61 so-called designated market areas, the merger would increase the market’s Herfindahl-Hirschman Index value by more than 200 points, resulting in a total value that antitrust regulators associate with a “highly concentrated” market, according to the filing.

“The merger would stifle competition and innovation in the MVPD market by reducing the number of competitors from four to three in the AT&T U-verse territories, which cover nearly a quarter of the U.S.,” S. Derek Turner of Free Press wrote in the 41-page filing, which urged the Federal Communications Commission to deny the merger.

Last week, in a separate FCC filing, two other organizations also claimed the merger would substantially reduce competition. Such loss of competition would result in higher prices and boost AT&T’s incentive to discriminate against online video providers, argued Public Knowledge and the Institute for Local Self-Reliance.

AT&T’s U-verse TV serves 5.9 million subscribers. That’s less than a third of DirecTV’s base of 20.2 million U.S. customers.

AT&T has expressed confidence that regulators will approve its $49 billion acquisition. In a conference call with financial analysts earlier this year, an AT&T executive said AT&T and DirecTV “are not each other’s closest competitors by any stretch of the imagination.”

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