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Merger of AOL, Time Warner Facing Hurdles

September 20, 2000|From Bloomberg News

WASHINGTON — America Online Inc.'s $142-billion buyout of Time Warner Inc. may be opposed as soon as this week by Federal Trade Commission lawyers, putting additional pressure on the companies to negotiate concessions, people familiar with the review said.

The recommendation by FTC lawyers that the commission move to block the merger in court comes as European Commission antitrust enforcers are threatening to give similar advice to policymakers in Brussels if the companies don't make satisfactory concessions.

AOL and Time Warner, whose combination would create the world's largest media company, have taken a hard line on FTC staff demands that they guarantee rival Internet services access to Time Warner's cable system for high-speed Web surfing and pledge not to discriminate against video and music programming produced by competing media companies.

The concessions demanded by regulators probably would be acceptable to the companies if that's what it takes to complete the transaction, analysts and investors said.

"In the scheme of things, [the concessions] would be relatively minor," said Mark Cavallone, an equity analyst at Friends Ivory & Sime, which owns AOL shares.

Still, the European Union's Oct. 24 deadline for making a decision on the merger pressures the companies to settle with the FTC by then, legal experts said.

"There is no ability to delay," said Howard Morse, a Washington antitrust lawyer and former FTC official. "The EU has become increasingly aggressive on antitrust matters in recent times."

Morse noted another worry: "There is concern among American companies that they may not get a fair shake because this is a deal involving two American companies."

On the NYSE, AOL shares rose 38 cents to $56; Time Warner dropped 31 cents to $80.94.

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