The U.S. Department of Justice has launched an investigation into whether Netflix engaged in unfair practices against content producers including film studios. While the probe was initially expected to focus solely on antitrust concerns arising from Netflix's proposed acquisition of Warner Bros., authorities are now examining Netflix's own business conduct separately.
Bloomberg reported on the 22nd (local time) that "the DOJ is investigating whether Netflix's proposed acquisition of Warner Bros. could substantially reduce competition or create a monopoly in violation of Section 7 of the Clayton Act or Section 2 of the Sherman Act."
Merger reviews typically proceed under the Clayton Act, the standard legal basis for such investigations. The Sherman Act is primarily applied to illegal monopolistic conduct by single companies, as seen in cases involving Google and Live Nation Entertainment.
"The probe shows the Donald Trump administration is going beyond the typical merger review process," Bloomberg reported. "With the Justice Department's expanded scope, it is expected to take several more months before the government decides whether to challenge the deal in court."
In response, Netflix Chief Legal Officer David Hyman said, "We don't have monopoly power and we don't engage in exclusionary conduct. We will gladly cooperate, as we always have, with any concerns regulators may have."