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Leaving the courtroom, Makan Delrahim, head of the Justice department's antitrust division, said that he would read the judge's opinion before making a decision on an appeal.

"Allowing this merger to proceed raises serious concerns for consumers and the future of American media, and also sends a troubling signal to others that it's open season for vertical mergers that could allow a company to raise the cost of essential products and services that its rivals need to compete, leading to higher costs for consumers and less innovation", she said in a statement. Comcast is expected to bid for some of Twenty-First Century Fox Inc. assets as soon as tomorrow.

The Justice Department filed a lawsuit to stop the deal in November 2017, saying that AT&T's ownership of both DirecTV and Time Warner would give AT&T unfair leverage against rival cable providers that relied on Time Warner's content, such as CNN and HBO's "Game of Thrones". "For AT&T and Time Warner, this is a major victory lap".

While the motive behind the challenge to AT&T's deal may never be known, Blair said politicizing the process would be "extremely unsafe for the country".

Shares of AT&T fell about 1.3 percent in after-hours trade following the decision, while Time Warner rose more than 5 percent. First floated in October 2016, the deal also brought fire from then-candidate Donald Trump, who promised to kill it "because it's too much concentration of power in the hands of too few". "AT&T Watch would be a very low end, very thin collection of products, and I think this one will be based on getting the Time Warner deal done", AT&T's CEO John Stephens said.

The ruling comes with other big mergers awaiting review. Pressing in the wings are potential big-billions deals involving 21st Century Fox and Disney, Verizon and CBS, T-Mobile and Sprint.

Leon announced his decision after the stock market closed on Tuesday, and Comcast shares slumped 4 percent in after-market trading on fears that it would overpay for Fox.

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AT&T had said it needed Time Warner to compete with the likes of Amazon, Netflix and Google, and that the deal would improve technology and give consumers more choices.

Notably, the ruling does not require AT&T to divest any assets of Time Warner to complete the transaction.

The DOJ filed suit against AT&T in November of a year ago, claiming that if the deal were allowed to go through, Time Warner's Turner television networks could be withheld from competing TV carriers or licensed at such a high cost as to give AT&T (who also owns DirecTV) an unfair advantage over its competitors. Industry analysts had expected AT&T to win, but many speculated that the judge would force the company to agree to certain measures. He rejected the government's argument that it would hurt competition in pay TV and cost consumers hundreds of millions of dollars more to stream TV and movies.

After the decision, Mr Petrocelli said: "We were surprised when the case was brought and as I said in closing arguments, it's a case that never should have been brought".

Initially, the companies planned to use a "selective enforcement" defense, alleging that the administration was blocking the deal because of Trump's disdain for CNN.

Gene Kimmelman, a former DOJ antitrust official who now leads the consumer advocacy group Public Knowledge, told the Washington Post that if the government lost the case, "they'll face an avalanche of new transactions".

"We're disappointed that it took 18 months to get here, but we are relieved that it's finally behind us", he told reporters after the decision.


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