The Justice Department yesterday sued to block AT&T from merging with Time Warner—a move that was either a complete surprise or completely predictable, depending on your point of view.

It was a surprise if you consider that the two companies don’t compete with each other; that the Justice Department hasn’t sued to block a vertical merger since the Carter administration; that the head of antitrust—Makan Delrahim—said last year he didn’t see any issues with the combo; and that this administration has been relentless in its drive for deregulation. On the other hand, it’s predictable if you consider Time Warner owns CNN, which has been a relentless thorn in Donald Trump’s side, leading him to promise to block the deal because “it’s too much concentration of power in the hands of too few.”

The department’s argument is that AT&T might give its users preferred access to Time Warner content. Ordinarily, it could address that concern by imposing conditions on the merger. But Delrahim says those kinds of conditions turn the Justice Department into a regulatory agency, and he would rather simply block the merger. Needless to say, AT&T CEO Randall Stephenson plans to fight the action, and may force the White House to disclose embarrassing communications with the Justice Department as part of the discovery process.

It’s possible Stephenson could have avoided this fight if he had simply promised to tone down CNN’s over-the-top anti-Trump rhetoric. But Stephenson hasn’t gone there, instead becoming a fervent defender of the First Amendment. Good for him, although in my view, CNN would benefit from some toning down.

More news below. And don’t miss Clay Chandler’s piece on how China has moved from copy cat to innovation incubator. We will be highlight some of the leading Chinese innovators next month at Brainstorm Tech International, which precedes the Fortune Global Forum in Guangzhou.

Top News

• Keystone Hits Milestone

Nebraska regulators voted to approve a route for TransCanada’s Keystone XL pipeline through the state, lifting the last big regulatory obstacle for the long-delayed project. The 3-2 decision by the Nebraska Public Service Commission helps clear the way for the pipeline linking Canada’s Alberta oil sands to refineries in the U.S., but is likely to be challenged in court by opponents who say the project is an environmental risk. Without Keystone XL, the economics of many oil sands projects—which are already squeezed by low crude prices—will be severely challenged. Fortune

• Germany Begins to Drift

Germany’s President Frank-Walter Steinmeier appealed to all of Germany’s mainstream parties to think again about refusing to govern with Angela Merkel’s Christian Democrats. No dice, said the center-left SPD and the pro-business FDP. That leaves new elections sometime in the new year as the likeliest option—even though the polls suggest a new election would generate much the same splintered Bundestag. Ironically, Germany’s stock market is doing well on the news because the drop in the euro since Sunday is good for its exporter-heavy DAX index. Emmanuel Macron and Theresa May can only look on in frustration, their plans for Eurozone integration and Brexit, respectively, thwarted by the absence of a clear line from Berlin. Fortune

• Wanda Opens the Door to Asset Sales

Wang Jianlin’s Wanda Group signalled it may retreat from some overseas projects, months after China’s authorities cracked down on a debt-fueled spending spree by big conglomerates that represented a threat to the renminbi’s stability. The group’s hotel arm said it was open to “business opportunities,” but denied a South China Morning Post report that claimed it was looking to offload $5 billion of assets to a single buyer. Wanda Hotel's biggest overseas developments, which mix high-end flats with luxury hotels, take in London, Sydney, Australia’s Gold Coast, and the Vista Tower in Chicago. Fortune

• Big Tobacco Has the Last Laugh

Tobacco ads are set to return to the airwaves Sunday, but not the ones that Altria, BAT, and Lorillard would ideally like. These new spots are the “corrective statements” about the health effects of smoking that Big Tobacco was ordered to issue after losing its epic battle with the federal government in 2006. But the industry is set to have the last laugh, having spun the enforcement of the ruling out for so long that the intended beneficiaries—young people who would otherwise not know the danger of smoking—no longer watch network TV or read newspapers, the media where the ads are supposed to run. ABC

Around the Water Cooler

• Men Behaving Badly

CBS decided that a Rose didn’t smell as sweet under the name of "predator." The network suspended its 75 year-old host after The Washington Post reported that eight women associated with his PBS program accuse him of sexual harassment. The New York Times, meanwhile, suspended influential White House correspondent Glenn Thrush after reports of repeated inappropriate advances towards young women. Both issued penitent statements while pleading their historical solidarity with women’s causes. Fortune

• Judge Strikes Down Trump’s Sanctuary Cities Gambit

President Trump received a setback in his running battle with so-called "sanctuary cities" such as Chicago and Philadelphia. A federal judge ruled that the administration couldn’t withhold funds already approved by Congress, just in retaliation for cities’ lack of cooperation in enforcing immigration law. The DoJ vowed to appeal again. Fortune

• Volvo in Line for Uber Windfall

Uber said it will buy up to 24,000 self-driving cars from Volvo with a view to rolling out an autonomous taxi service from 2019. The order (Volvo’s biggest ever) makes for good PR for both companies, but Uber’s self-driving technology is still overshadowed by accusations of IP theft and the loss of some of its top talent. Fortune

• U.K. Ponies up to Break Brexit Impasse

The U.K. is set to offer more money to the EU in a bid to kickstart talks on future trading relations between the two after March 2019. Various reports suggest Theresa May will offer EU leaders up to €40 billion to cover the U.K.’s outstanding commitments, in the hope that the 27 other member states will accept at a summit in mid-December. Failure would mean that companies across the U.K. economy would likely start moving operations and personnel to the Continent in the new year so as to insure themselves against the risk of a legal vacuum for cross-border trade in 2019. BBC

Summaries by Geoffrey Smith; geoffrey.smith@fortune.com

@geoffreytsmith