Judge allows Sprint suit against AT&T/T-Mobile deal

WASHINGTON Wed Nov 2, 2011 7:55pm EDT

This logo was provided by Sprint at a presentation in New York. REUTERS

This logo was provided by Sprint at a presentation in New York.

Credit: Reuters

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WASHINGTON (Reuters) - A 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 December 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.

(Additional reporting by Sinead Carew in New York; Editing by Gary Hill)

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