AT&T expected it would have more time to argue its case for the $39 billion acquisition of T-Mobile USA. However, just one hour after CEO Randall Stephenson expressed confidence the buyout would be approved in early 2012, Justice Department lawyers announced an antitrust lawsuit blocking the deal.
The decision by U.S. government regulators came just a day after a meeting with the government that included more than 40 people. The gathering included “representatives of AT&T, T-Mobile, a unit of Bonn-based Deutsche Telekom AG (DTE), the Justice Department and the Pennsylvania attorney general,” Bloomberg reports.
AT&T’s representatives thought the DOJ lawyers presented “thoughtful rather than confrontational” questions at the meeting, causing the lawsuit to be a surprise, according to unnamed sources cited in the report. Sharis Pozen, acting head of the Justice Department’s antitrust unit, however, expressed concern the tie-up would “leave local and national wireless markets to be concentrated.”
Although Pozen has said her department’s “door is open” to more talks, Harold Fed, the legal director of a consumer group opposing the merger noted the “Justice Department doesn’t use litigation as a settlement tactic.” If AT&T cannot overcome the government’s objections, the deal’s failure could be costly. AT&T would be forced to pay T-Mobile USA’s parent company up to $6 billion in cash as part of the deal’s rejection. To prevent that, the carrier is considering a number of ways to make the agreement more palatable to government regulators.
One option is to sell 25 percent of T-Mobile USA’s assets, including airwaves and subscribers, according to Reuters. While this might satisfy concern about competitiveness, there’s the question of a limited pool of buyers: Verizon Wireless or Sprint. A former Justice Department official in the antitrust division called a sale of T-Mobile assets to Verizon a “no-go,” while the chance of Sprint snapping up T-Mobile territory a possible no-go, as well.
If the antitrust issue makes it to a court, the outcome should be rather speedy. The case could reach Washington D.C. U.S. District Court Justice Ellen Segal Huvelle within two months. Huvelle is known for quickly handing down rulings. Meanwhile, AT&T could appear with a former head of the DOJ’s antitrust unit for communication and the lawyer who shepherded the $41 billion purchase of AT&T Wireless by Cingular Wireless.
In turn, T-Mobile USA’s parent firm has a legal eagle George Cary of Cleary Gottlieb Steen & Hamilton LLP. Cary is known as the “Lou Gehrig of antitrust.” All of which sets the stage for one of the most explosive (and entertaining) antitrust battles since Microsoft.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
8 responses to “AT&T Expected ‘More Time’ Before Justice Department’s Antitrust Lawsuit”
We continue to destroy our high tech industry for the enrichment of patent trolls. When will we learn .
The only way this acquisition should be allowed (and it shouldn’t) is if the requirements include lower prices, higher data caps, and more coverage in rural areas. Since none of those would likely happen except for slightly more rural coverage AT&T isn’t deserving of the T-Mobile acquisition.
Att could make t-mobiles network with around 4 billion yet they want to buy them for what is it 39 billion. Att had other motives for this. I hope it doesn’t go through. Att hasn’t done much with the Billions upon Billions they’ve raked in from the iPhone customers. We should have the best network by now we’ve all sure payed in enough for CEO’s to get huge Bonuses.Â
No, they couldn’t. Part of the reason that AT&T wants T-Mobile is spectrum, which they sorely need.