Competition matters: Netflix? Paramount? Both bad for Warner

Business leaders like to say that what they want most from the law is certainty — clear rules to plan around. If that’s the case, they should be satisfied to learn that Netflix’s plan to buy Warner Bros. Discovery is illegal under US law, as is Paramount’s competing takeover bid.

The Clayton Act of 1914 bans acquisitions whose effect “may be substantially to lessen competition, or to tend to create a monopoly.” According to the Federal Trade Commission and Justice Department guidelines, both mergers appear to “raise a presumption of illegality.”

Some argue that Netflix’s merger deserves support because Paramount would be an even worse buyer. The case against Paramount centers on David Ellison’s ambition to build a media empire with his father’s money and to gut CNN, owned by Warner Bros.