By Rachel Haugen.
Introduction
On December 8, 2025, Paramount Skydance Corporation (“Paramount”), announced an offer to acquire Warner Bros. Discovery, Inc. (“Warner Bros.”), outbidding Netflix’s previous deal with Warner Bros by $18 billion. Paramount offered to pay cash for $30 per share for all of Warner Bros.’s assets. When making this offer, Paramount claimed that the deal “enhances competition and is pro-consumer.” Skeptics quickly questioned this view. Fears emerged that the merger would harm consumers and those who work in the movie industry. Critics also oppose the merging of news stations under the control of a Trump-friendly Paramount CEO with close ties to Trump and his administration.
DOJ Declines to Challenge the Merger
On June 12, 2026, the Department of Justice (“DOJ”) announced that it was closing the investigation into the Paramount-Warner Bros. merger after eight months. The DOJ found that there would be no harm to competition or consumers if the merger were to go through. They even cite a potential increase in competition resulting from the merger. This approval gave the companies confidence, and they announced their intention to close the deal by the fall of 2026. However, the DOJ’s decision was not the end of the merger’s antitrust scrutiny.
Coalition of 12 states Challenge the Merger
State attorneys general were not as optimistic about the proposed merger. Less persuaded by politics and more focused on economics, California led a coalition of 12 state attorneys generals, including Arizona, that sued to stop the merger. The lawsuit alleges that the merger would lessen competition, violating Section 7 of the Clayton Act, a federal antitrust regulation. After the merger, only four companies would control around 90% of wide release film and top-grossing film distribution. Such reduced competition, states argue, would likely harm consumers and employees.
Recently, the states reached a settlement with Paramount. This settlement agreement outlines a five-year commitment to increase film output and investment in domestic film production, protect impacted workers, and keep cable negotiations separate.
The battle is finally over. The fate of the merger rested in the hands of Judge Martinez-Olguin as the settlement was a consent decree which required federal court approval. A key concern with the settlement was the lack of any requirement for the divestiture of assets. The judge questioned during a hearing whether the agreement would sufficiently protect competition. She also expressed concern with the dramatic shift from the coalition’s initial position which sought to completely block the merger. Nevertheless, the settlement was approved and the deal closed on October 6, 2026.
The state action against this merger marks the recent shift toward more independent state action in antitrust cases, as the federal government has become increasingly inconsistent in their enforcement.
The Growing Role of States in Antitrust Regulation
Traditionally, states collaborate with the federal government as a form of cooperative federalism to enforce antitrust regulations. This creates the most robust form of antitrust regulation as the states can focus on state laws and local harms while the federal government can tackle the national impact and impose federal regulations.
However, when the federal government fails to take action where the states see a concern, state attorneys general have the authority to take action independently as a form of “checks and balances federalism.” The Hart-Scott-Rodino Antitrust Improvements Act of 1976 granted state attorneys generals the statutory authority to file for injunctive relief under the Clayton Act. Further, states are passing more antitrust laws to give their attorneys general more authority. Some states are even enacting statutes that require merging companies to submit pre-merger notifications to the state, giving the states an earlier chance to review the merger and take any necessary action independently of the federal government.
The state attorneys general exercised their right to bring a federal civil action under the Clayton Act in the Paramount-Warner Bros. merger case. In fact, the states and federal government were initially coordinating their efforts with state participation in the DOJ’s investigation of the merger. However, when the DOJ chose not to take action, the states quickly initiated their independent action. They established standing by arguing the merger would negatively affect the people in their states.
Conclusion
The Paramount-Warner Bros. merger illustrates the increasingly independent role that states can play in antitrust enforcement. With this uptake in independent state antitrust regulation and the differing opinions from their federal counterparts, companies considering merging need to also consider state level implications and ensure that the merger qualifies with both federal and state regulations.
Originally from Silverdale, Washington, Rachel Haugen is a second-year law student at the Sandra Day O’Connor College of Law at Arizona State University. She is currently externing in the Arizona Court of Appeals Division I. This past summer she was a summer associate at Stoel Rives in Seattle, Wa. Rachel received her B.S. with a double major in Psychology and Economics from the University of North Carolina at Chapel Hill. In her free time, she enjoys running, teaching her dog tricks, and enjoying the outdoors.
