Netflix-Warner Bros deal: Trump’s DOJ to probe streaming platform’s power over filmmakers — what we know
The U.S. Department of Justice (DOJ) investigation into Netflix’s $72 million takeover bid of Warner Bros. Discovery is examining whether the streaming platform exerted anticompetitive influence over filmmakers and creators in program acquisition negotiations.
According to a report prepared by BloombergCiting a copy of the civil investigative request, the Donald Trump administration’s Justice Department investigation is seeking to determine whether the proposed Netflix-Warner Bros. deal would “substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act or Section 2 of the Sherman Act.”
Bloomberg It also reported that the language used in the request for a civil investigation indicates that the Trump administration will launch an investigation that is much broader than a typical deal review.
This approach may turn out to be a long one, and the Trump administration’s Netflix-Warner Bros. suggests it will likely be many more months before he decides whether to challenge his deal in court; this delay is likely to benefit rival bidder Paramount Skydance Corp.
What is the Ministry of Justice looking at?
The two laws under Justice Department investigation, the Clayton Act and the Sherman Act, concern merger investigations and illegal monopolization, respectively.
according to Wall StreetJournalThe Justice Department’s review of the deal, which first reported the scope of the Trump admin’s investigation into Netflix, will examine Netflix’s business practices and try to determine whether the deal would give the streaming giant monopoly power in the future.
To that end, the DOJ is raising questions about Netflix’s ability to use its market power in its conversations with filmmakers and movie studios. Bloomberg It was reported by citing people with knowledge of the matter.
However, it is worth noting that monopoly situations require firms’ market concentration to be greater than 50%; This figure is much higher than the current 9% TV viewing rate controlled by Netflix in the US. While the streaming giant has a larger share of the streaming market, its control of the market is still well below 50%. Bloomberg.
What did Netflix say?
Netflix disputed the suggestion that it might engage in anti-competitive practices.
“Netflix operates in a highly competitive market. Any suggestion that it is or is seeking to become a monopolist is unfounded. We neither have monopoly power nor engage in exclusionary behavior and will happily cooperate with regulators on their concerns, as we always do,” David Hyman, the streaming giant’s chief legal officer, said.
The streaming giant also denied receiving any official indication of an antitrust investigation by the Justice Department.
“We have not been notified or seen any other indication that the DOJ is conducting an antitrust investigation,” said Steve Sunshine, head of Skadden, Arps, Slate, Meagher & Flom LLP’s global antitrust/competition group, which represents Netflix. Bloomberg.
