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The AT&T-Time Warner Merger Ruling Is Expected Tuesday. Here’s What’s at Stake

The AT&T-Time Warner merger saga will soon finally be over.

On Tuesday Judge Richard Leon is expected to announce whether he’ll allow the deal to go through after years of negotiation, much political uncertainty, and a six-week trial earlier this year. At stake is not only the deal that would bring together the telecom and content giants, but also a precedent for deals at a similar scale. Here’s what to know when you hear the verdict.

The Arguments

The DOJ’s bid to block the merger is based on the argument that prices for consumers will go up too much if the companies are allowed to join, and that the new company could block competitors from the market. AT&T (T) says that argument is based on antiquated antitrust law. Moreover, the companies say they expect costs to consumers to go down, and they point out that even if the government’s math is correct it would be a matter of cents more per subscriber per month.

The Politics

President Trump has made no secret of his opposition to this deal, which some think is part of his larger battle against the Time Warner-owned news network CNN, which Trump has called “fake news”. The appearance of interference in Justice Department proceedings is not good for the government’s argument in this case. The Justice Department and White House Press Offices have both said Trump did not interfere to bring about the proceedings, but that argument has been undermined by Rudy Giuliani, a lawyer for the president. Some lawmakers wanted to put potential political interference at the center of this trial, but Judge Leon opted to focus on whether the deal would be anti-competitive.

The Consequences

If allowed to proceed, the AT&T-Time Warner merger would open the door to other large-scale vertical mergers that are currently in progress, and set precedent for the remainder of the Trump administration and beyond. The first deal likely to be affected by the outcome for AT&T and Time Warner (TWX) is the proposed merger of CVS Health and Aetna, which, like AT&T and Time Warner, occupy different locations in the same supply chain.

Also awaiting the verdict with bated breath is Comcast (CMCSA), which is champing at the bit to make an offer to buy 21st Century Fox (FOX), edging out Disney’s $52 billion proposed buy-out. An outright approval of the AT&T-Time Warner deal would give the Justice Department only flimsy ground to stand on if they were to oppose the Comcast bid. But if the AT&T-Time Warner deal is blocked it’ll signal trouble ahead.