A federal judge ordered the temporary suspension of the merger between Paramount and Warner Bros., responding to a lawsuit filed by a coalition of 12 states, led by California, which argues that the operation would violate antitrust law.

Judge Araceli Martínez-Olguín, of the Northern California District Court, issued a 14-day restraining order — extendable up to 28 — and set a preliminary hearing for August 3.

The plaintiff states maintain that the union of two of the three main cable programmers and two of the five largest film distributors would reduce competition, increase prices and limit the supply of films and programs.

California Attorney General Rob Bonta called the ruling “a crucial first victory” to prevent this “mega-combination” from coming to fruition.

Paramount defends the merger

For its part, Paramount defends the merger as legal and pro-competitive, arguing that it would create a stronger rival against streaming giants such as Netflix and Amazon, and that the current market is more dynamic thanks to new players such as A24 or Amazon MGM.

The company hopes to demonstrate the groundlessness of the state accusations.

However, the judge rejected the notion that efficiencies in the streaming market could justify harm in other markets, such as cinema or cable. In its resolution, it highlighted that the balance of interests and the public interest in enforcing antitrust laws tip the balance in favor of the injunction.

Paramount had agreed not to close the transaction before July 22 and offered to extend that pause up to 30 days. However, if the deal is not closed before September 30, the company would begin to owe Warner Bros. investors millions of dollars a day. In antitrust cases, the granting of an injunction is usually decisive, and if it is maintained, the operation tends to fail before reaching trial, according to expert analysis.