The Department of Justice has entered the legal fight over Paramount’s proposed merger with Warner Bros., backing Paramount’s push to make a 12-state coalition post a bond if it wants to keep blocking the deal.
In a filing Tuesday, the DOJ submitted a statement of interest in the state-led antitrust case, arguing that the states should be required to put up a “proper bond” while they continue their challenge. Paramount has asked Judge Araceli Martinez-Olguin to set that bond at at least $1.88 billion, the amount the company says it stands to lose from the delay if it ultimately wins at trial.
The Justice Department is not itself a party to the states’ lawsuit. But its filing puts the federal government’s antitrust arm squarely on Paramount’s side in a key procedural fight that could shape the practical stakes of the case before trial begins.
According to the DOJ’s argument, the states are acting in the role of “private persons” as they seek to enforce federal antitrust law, and therefore should be required to post a bond if they continue to restrain the transaction.
A split between federal and state enforcers
The filing underscores the sharp divide between the DOJ and the state coalition over the Paramount-Warner Bros. merger. The Justice Department approved the transaction in June and issued an unusual, lengthy statement explaining its support for the deal.
The 12 states, led by California, took the opposite position the following month. In July, they sued to stop the merger, arguing that it would reduce competition in the theatrical and basic cable markets. A trial in the case is scheduled to begin March 2.
Paramount had already agreed in July not to close the transaction until after a trial is held. At that point, Martinez-Olguin had issued a 28-day temporary restraining order, but had not put in place an injunction that would indefinitely block the deal.
Rather than contest an injunction motion and risk having to appeal an unfavorable ruling, Paramount chose to accept the delay and focus on defending the merger at trial. But in August, the company reversed course on the bond issue, asking the court to require the states to post the $1.88 billion bond or, alternatively, allow the merger to move forward.
States say bond would weaken enforcement
The state coalition has opposed Paramount’s request, arguing that courts routinely waive bond requirements when states sue to protect public interests. Martinez-Olguin previously waived the requirement when she granted the temporary restraining order.
The states also warned that forcing them to post a bond of this size would undercut their ability to enforce antitrust law. They further argued that Paramount had not provided a valid reason for the court to revise a stipulation the company had voluntarily accepted less than a month earlier.
“Permitting Paramount to enter the stipulation and then rewrite it almost immediately would allow it to unfairly renege on its commitments,” the states argued. “Paramount has failed to show any change in circumstances that would justify its attempt now to rewrite the terms of the stipulation it submitted to the Court.”
The bond dispute is now headed for a hearing on Sept. 24.
Paramount has also separately challenged whether the states have authority to enforce federal antitrust law at all. In a filing last week, the company indicated that one of its defenses will be that such authority “is vested in the U.S. Department of Justice.”
For now, the merger remains tied up in the state antitrust challenge, with the DOJ’s latest filing adding weight to Paramount’s argument that the states should bear financial risk if they continue to delay the transaction and lose at trial.