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UPDATE 2-Judge allows Sprint suit against AT&T/T-Mobile deal
* AT&T and T-Mobile had sought to dismiss lawsuit
* C Spire can also pursue injury claims, judge rules
* Some claims by Sprint are dismissed
By Jeremy Pelofsky
WASHINGTON, Nov 2 (Reuters) - A U.S. judge on Wednesday ruled that Sprint and C Spire Wireless can pursue part of their antitrust lawsuit against AT&T Inc's proposed $39 billion acquisition of T-Mobile USA.
AT&T and T-Mobile, a unit of Deutsche Telekom AG , had sought to dismiss the lawsuit, but U.S. District Judge Ellen Huvelle agreed to allow the competitors to pursue their injury claims about the effect the deal would have on the market for wireless devices.
The decision may complicate matters for AT&T and T-Mobile USA because they will now have to simultaneously fight the government's attempt to block the deal and argue against claims by the two competitors.
The judge also agreed to allow C Spire, a small regional carrier previously known as Cellular South, to pursue injury claims about the effect the deal would have on roaming services, according to the 44-page ruling.
"Where private plaintiffs have successfully pleaded antitrust injury, the fact that they are defendants' competitors is no bar" to pursuing their claims, Huvelle wrote.
She did agree to dismiss the remaining claims alleged, including that Sprint, the No. 3 U.S. wireless carrier, would be hurt in the market for wireless airwaves that are needed to serve customers and the market for network development.
Sprint had also argued that the combination of AT&T and T-Mobile would hurt the market for backhaul services, links between the core network and more remote locations. Huvelle said that Sprint's theory was not sufficiently supported.
Wayne Watts, AT&T Senior Executive VP and General Counsel, said the ruling dismissed "the vast majority of the claims" from Sprint and CellSouth.
"We believe the limited, minor claims they have left are entirely without merit," he said in an emailed statement.
Sprint and C Spire said they were pleased the court allowed them to continue to fight their cases. The decision will also allow the competitors to get documents related to the case from AT&T and T-Mobile.
The strategy by AT&T's competitors is unusual because competitors opposed to such combinations often just complain publicly rather than file their own lawsuit, typically leaving that up to antitrust enforcers.
Plus, U.S. antitrust law is designed to protect consumers, rather than competitors, which means that courts would be expected to view a competitor's lawsuit skeptically.
Huvelle ordered a scheduling conference for the competitors' antitrust lawsuit for Dec. 9.
The Justice Department in August sued to block the combination of the two wireless carriers, which would vault No. 2 ranked AT&T into the leading position in the U.S. wireless market over Verizon Wireless.
The government argued it would crimp competition, lead to higher prices and hurt innovation. That case goes to trial in February.
The cases are USA v. AT&T, T-Mobile USA Inc and Deutsche Telekom AG, case No. 11-1560 and Sprint Nextel Corp v. AT&T Inc et al, No. 11-1600, and Cellular South v. AT&T, No. 11-1690. All the cases are before the U.S. District Court for the District of Columbia.
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Taking into account the whole U.S. market, a combination of AT&T and T-Mobile would increase the Herfindahl-Hirschman Index (HHI), a widely accepted measure of market concentration, to 3,216 from 2,848, according to a Bloomberg analysis. Any score above 2,500 indicates a highly concentrated market, and any increase of more than 200 points clearly enhances market power, according to federal guidelines.
If this ridiculous deal goes through, Sprint will be the only low-priced post-paid national wireless carrier left in the United States. T-Mobile customers are already fleeing to Sprint because they know they won’t get low prices from AT&T or Verizon. But AT&T and Verizon are two of the top corporate lobbyists in the country, so beware of how things could “mysteriously” turn in this case.
“It’s only a slight overstatement to say that if they weren’t going to block this one, the Justice Department might as well just throw the antitrust guidelines out the window,” said Herbert Hovenkamp, professor of law at the University of Iowa, who is considered by many to be the dean of American antitrust law. “This merger clearly seems to violate them.”
Snippets from CNN story …
AT&T lobbyists push for T-Mobile deal
For years, AT&T has been one of the biggest political and lobbying forces in Washington, D.C. Last year, it spent $15.3 million and had 93 lobbyists on its roster, including six former lawmakers. Germany’s Deutsche Telekom spent $3 million on lobbying for T-Mobile USA in 2010, armed with 41 lobbyists and one former lawmaker.
Many lawmakers have a personal interest in seeing AT&T do well. AT&T ranked as the sixth most popular investment among members of the House and Senate in 2009, the most recent year for which such data is available, according to the Center for Responsive Politics.
And AT&T is considered a heavy hitter during campaign election cycles. In 2010, donors with links to the company made nearly $4 million in campaign contributions to candidates running for federal office.
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