The Justice Department's new antitrust chief made clear Thursday he doesn't favor approving mergers based on corporate commitments to refrain from particular conduct, another potentially ominous sign for AT&T Inc.'s planned deal for Time Warner Inc.
The issue has proved a key one in discussions between the companies and the Justice Department, which is considering a lawsuit against the deal.
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The AT&T-Time Warner transaction is a vertical merger that combines complementary companies instead of direct competitors. In the past, the Justice Department has shown a willingness to approve such deals, even if they raised competition concerns, so long as the merging parties agreed to so-called behavioral remedies.
This happened, for example, when Comcast Corp. in 2011 won approval to take control of NBCUniversal after promising to abide by a range of conditions, including a requirement to offer its content to online video distributors on reasonable terms.
Many analysts initially thought the AT&T deal would be approved with similar conditions.
But Justice Department antitrust chief Makan Delrahim, speaking at an American Bar Association conference Thursday, said there was bipartisan agreement that behavioral conditions have often proved to be inadequate.
Mr. Delrahim said such conditions were a form of government regulation that the Justice Department was ill-equipped to impose, and he criticized past antitrust enforcers for experimenting "with allowing illegal mergers to proceed subject to behavioral commitments."
The antitrust chief went on to note that some antitrust experts have criticized the Comcast settlement.
Mr. Delrahim also offered an indirect shot at AT&T, even though he didn't mention the company by name. He quoted from a letter 11 Democratic senators sent to the Justice Department last summer raising objections to the AT&T-Time Warner deal.
His remarks came a week after he offered indirect pushback on AT&T during a public appearance in California.
During a recent meeting, the Justice Department told AT&T it would need to offer structural changes to its transaction to win government approval, such as selling off Time Warner's Turner Division, which includes several popular channels like CNN, TBS and TNT. The department also said AT&T could consider divesting its DirecTV satellite arm, or perhaps offer other solutions.
AT&T has been resistant to making significant changes to its deal.
The Justice Department believes the deal could give AT&T too much leverage over competitors and harm consumers, according to people familiar with the matter. Its decision on whether to file a lawsuit could come within days.
AT&T argues the department's concerns are misguided, especially in an age when online TV packages offer consumers more ways than ever to access entertainment. The company says its deal would help make film and TV more affordable.
AT&T couldn't immediately be reached for comment on Mr. Delrahim's speech.
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(END) Dow Jones Newswires
November 16, 2017 13:44 ET (18:44 GMT)