But Judge Richard Leon rejected those arguments, approving the deal without conditions.
The ruling is a stinging defeat for the Justice Department.
AT&T can use the content from Time Warner to fill its streaming services DirecTV Now and soon-to-be-launched AT&T Watch, which are cheaper online video packages with fewer channels.
"This decision could make it extremely hard for the antitrust agencies to fulfill their congressionally mandated duty to promote competition and prevent mergers that may substantially lessen competition", Mr. Nadler said.
Burns McKinney, a portfolio manager at Allianz Global Investors who owns AT&T, said he would not say the telecoms company had won a huge victory.
"Common sense tells you that this degree of concentrated power isn't right", wrote Zephyr Teachout, a candidate for attorney general of NY, wrote immediately following the judge's ruling.
The DOJ and the White House have previously denied charges of political interference.
The decision amounts to a stunning loss for Delrahim, President Donald Trump's chief antitrust regulator. The transaction is one of the biggest in media and telecom industry history.
Time Warner gained as much as 5.8 percent in after-hours trading, while AT&T fell as much as 3.9 percent.
The judge didn't buy that. But he signed off on the deal with no conditions and knocked down the government's contentions point by point.
Rep. Jerrold Nadler of NY, the ranking Democrat on the House Judiciary Committee, said he worries that the ruling will drastically alter the telecommunications industry. In a statement, Delrahim said he was "disappointed" in the ruling but stopped short of saying his division would appeal, saying only that it would "consider next steps in light of our commitment to preserving competition".
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AT&T will complete its merger with Time Warner by June 20, The Associated Press reported.
"We think the evidence throughout the trial was quite clear and we're very pleased that the court saw it the same way", said Daniel Petrocelli, AT&T's lawyer.
"The case stands as a testament to the wisdom of this combination of these two great companies and how it will benefit consumers for generations to come", he told reporters.
A Comcast spokesperson declined to comment. Disney has a deal to buy the bulk of Fox, but Comcast is now expected to make a counterbid, especially with the favorable ruling for AT&T. "The fact is that they've gotten a little easier, and we'll see a big flurry of deals". Leon, living up to his old-school reputation, read part of the ruling aloud and didn't allow anyone to report the news until he finished speaking.
Jennifer Fritzsche, senior analyst at Wells Fargo, said the ruling was the "best case scenario" for AT&T.
During the trial, the judge heard from dozens of witnesses, including AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes.
In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent.
An array of public interest and labor groups - many of them far from supporters of Trump - nevertheless supported the Justice Department's attempt to block the deal.
"We continue to believe that the pay-TV market will be less competitive and less innovative as a result of the proposed merger between AT&T and Time Warner", Mr. Delrahim said.
AT&T in a six-week trial argued that the purchase of Time Warner would allow it to gain information about viewers needed to target digital advertising, much like Facebook Inc and Google already do. But Leon blocked discovery on certain White House communications AT&T and Time Warner sought, and ultimately the companies dropped that defense, choosing to litigate the case on pure anti-trust grounds. Instead, he said the companies were frustrated that the resolution took 18 months, but were relieved that the fight was finally over.
- CNN's David Goldman contributed reporting.