DOJ Files Lawsuit to Block AT&T T-Mobile Merger

August 31, 2011 -

Bloomberg reports that the U.S. Justice Department has filed a lawsuit to block AT&T Inc.’s proposed $39 billion acquisition of rival T-Mobile USA Inc. In its filing today in Federal Court the government said that the deal would "substantially lessen competition" in the wireless market. The government is seeking a declaration that AT&T’s takeover of T-Mobile (owned by Deutsche Telekom AG, or DTE), would violate U.S. antitrust law. The government also asked for a court order blocking implementation of the deal.

"AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market," the government said in its filing.

"AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers,” said the government in a statement. "AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor."

Naturally, analysts and supposed experts see this move differently. Bert Foer, head of the American Antitrust Institute in Washington, said that the DOJ has drawn a line in the sand with this move and that he didn't see any room to settle the case.

"If it could be settled, they would still be talking about it," Foer added.

"This isn’t just a negotiating strategy, this isn’t just a placeholder, they do mean to block it,” said Rebecca Arbogast, a Washington-based analyst with Stifel Nicolaus & Co. "There still is some room for negotiating a settlement, but the likelihood seems narrow."

Others disagree with that analysis - including David Balto, a Washington-based antitrust attorney; and New York University law professor Eleanor Fox.

David Balto thinks the lawsuit may be part of a negotiating strategy, adding that the government may have decided that "the best way to have strength in the settlement talks is to file a lawsuit."

"The important point is that the Justice Department has gone ahead and challenged a big merger of competitors, which it just hasn’t done," said Eleanor Fox, a law professor at New York University. "People were getting used to seeing press releases saying the Justice Department has agreed to merger XYZ with a spinoff."

AT&T said it was surprised by the government suit and that it would ask for an expedited hearing.

"We have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated," Wayne Watts, AT&T’s general counsel, said in a statement to Bloomberg. The company plans to fight the litigation.

Bonn-based Deutsche Telekom said in an e-mailed statement to Bloomberg that it would also contest the U.S. government suit.

"[The] DOJ failed to acknowledge the robust competition in the U.S. wireless telecommunications industry and the tremendous efficiencies associated with the proposed transaction," a spokesperson for the company said.

Rejection by regulators would leave AT&T liable to pay Deutsche Telekom $3 billion in cash, to give T-Mobile USA wireless spectrum and to reduce charges for calls into AT&T’s network, a package valued at as much as $7 billion, Deutsche Telekom has said.

"Given the size of the cancelation fee that was negotiated into this agreement, AT&T has the incentive to fight,” said Andrew Gavil, a law professor at Washington-based Howard University. "The fact that the Justice Department is challenging the deal doesn’t mean they won’t negotiate a resolution at some point."

"Any way you look at this transaction, it is anticompetitive," Sharis Pozen, the acting head of the Justice Department’s antitrust division, said at a news conference.

Pozen said the department interviewed dozens of people and examined millions of documents before deciding that suing was the right path to take, but added that the department’s "door is open" to discuss a remedy with AT&T.


Comments

Re: DOJ Files Lawsuit to Block AT&T T-Mobile Merger

Is it bad when I read this I though ok who at DOJ wants a job as lead council for AT&T? I seriously doubt the DOJ has the citiznes best interest in this lawsuit and its just trying to get something out of the merger.

Re: DOJ Files Lawsuit to Block AT&T T-Mobile Merger

dunno why the FCC is still thinking about this even after the 'leaked document'.  damn, they're even more corporate-whipped than i thought when it takes the DoJ to step in.  Naturally, ATT will just keep throwing money at them until they go away.

Re: DOJ Files Lawsuit to Block AT&T T-Mobile Merger

I hope this works.  We left AT&T years ago because of their horrible service (both phone wise and people wise at the time) and have been quite happy with T-Mobile.  This merger would have been the SECOND TIME we had a different company phone and became AT&T via a "merger" (Cingular was good for us at the time...).  

Part of this I think has to do with AT&T's own lawyers posting damming documents online that proved that while AT&T used the argument for acquiring T-Mobile for $39 billion was in order to reach 97% of rural areas to expand their services but the document showed that AT&T knew the whole time they could do it, without takeovers, for just over $3 billion.   What was the other $36 billion for?...basically taking out another competitor and not doing anything to truly expand. 

I hope they deny the HELL out of this. :)

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Re: DOJ Files Lawsuit to Block AT&T T-Mobile Merger

Honestly, it would be a lot better for us if there were fewer regulations on cellular businesses. If it were easier to start a cellular company and expand your network, there would be far more competing businesses.

My wife and I tried one of the smaller cell companies, but their network was so spotty we couldn't use them. We love their prices and their plans, but when you can't use the phone at home or within a 2 mile radius of home, it is kind of pointless. So we ended up back with a major national cell company.

Right now, it takes billions of dollars to get bandwidth from the FCC. Only the largest businesses can get that. So the smaller companies are forced to lease that bandwidth from the mega corporations in order to even begin service.

The system is set up to help big businesses to stay big and keep real competition from springing up.

Re: DOJ Files Lawsuit to Block AT&T T-Mobile Merger

What's this? DOJ defending the little guy against corporate raping?

Jolly good. [/euro]

Re: DOJ Files Lawsuit to Block AT&T T-Mobile Merger

I know, its about time they did something like this.

Re: DOJ Files Lawsuit to Block AT&T T-Mobile Merger

You'd think they would have done this a long time ago.

 
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quiknkoldpoor girl. poor victims. rather focus on them then the shooter. giving too much thought to the monster takes away from the victims.10/24/2014 - 10:15pm
Andrew EisenFor what it's worth, early reports are painting the motive as "he was pissed that a particular girl wouldn't date him."10/24/2014 - 10:12pm
quiknkoldwell then I suck as a man cause I ask for help when necessary :P10/24/2014 - 10:07pm
Technogeek(That said, mostly I was making the smartass evopsych comment because your post seemed like the kind of just-so story that has come to dominate 99% of its usage.)10/24/2014 - 10:04pm
TechnogeekHell, Liam Neeson built his modern career around it. Cultural factors likely play a far greater role than you appear willing to admit.10/24/2014 - 10:03pm
TechnogeekSeriously, though, the idea of "because women are protectors and that's why they never commit school shootings" is, at best, grossly overreductive. There's nothing inherently feminine about being willing to kill in order to protect one's offspring.10/24/2014 - 10:03pm
MechaCrashThe "toxic masculinity" thing refers to how you have to SUCK IT UP AND BE A MAN because seeking help is seen as weakness, which means you suck at manliness, so it builds and builds and builds until something finally snaps.10/24/2014 - 10:01pm
quiknkoldthere, I'm done. And thats what Christmas is all about, Charlie Brown10/24/2014 - 9:54pm
quiknkoldand I am not spouting Evopsych, technogeek. tbh I never heard the phrase till you said it. I'm going off my observations.10/24/2014 - 9:54pm
quiknkoldmoreover, the guy who did this isnt even white. He was native american according to the news report I read. Also that he went for a specific target. That's a much different picture than a certain Sandy Hook guy who will not be named10/24/2014 - 9:53pm
quiknkoldbut I am also certain nobody in their right mind is committing these shootings singing the Machoman song. these are sick individuals who have given up on life10/24/2014 - 9:51pm
Technogeekevopsych lol10/24/2014 - 9:49pm
quiknkoldWhen you suffer from mental illness, youre more likely to go by instinct. yes. I came off as sexist.10/24/2014 - 9:46pm
quiknkoldmore on somthing they are fixated on. Post Partum Depression is an example. This is why a woman is less likely to go off on a rampage.10/24/2014 - 9:44pm
quiknkoldA Mother will fight to protect her children or her mate. This does not mean they are any different then males when it comes to destruction and mental illness. A Woman has just enough opportunity to be sick like a man. The difference is they will focus10/24/2014 - 9:43pm
quiknkoldsociologist. I've spent years observing and I've come to the conclusion that a big reason men and women are different is because Women are Protectors. Women wont wantonly kill because they are all about protecting what they care about. They are wired this10/24/2014 - 9:43pm
james_fudgeYeah having a penis probably doesn't have a lot to do with it10/24/2014 - 9:32pm
quiknkoldIts Mental Illness. Nobody who is actually sane would willingly walk into a school and commit that. its Mental Illness topped with Teenage Angst. and I'm going to say something that may be construed as sexist, but I dont mean it as such. I mean it as a...10/24/2014 - 9:29pm
Matthew WilsonIt is a worth while discussion, but I dont agree with here premise. I dont belive it has anything to do with masculinity.10/24/2014 - 9:13pm
Andrew EisenAgreed but it's not untrue either. I think it's worth examining and discussing why mass shootings are almost always (if not literally always) committed by males.10/24/2014 - 8:57pm
 

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