FCC to let AT&T pull merger application

WASHINGTON Tue Nov 29, 2011 7:29pm EST

A view shows the AT&T store sign in Broomfield, Colorado April 20, 2011. REUTERS/Rick Wilking

A view shows the AT&T store sign in Broomfield, Colorado April 20, 2011.

Credit: Reuters/Rick Wilking

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WASHINGTON (Reuters) - Communications regulators released a staff report criticizing AT&T Inc's $39 billion plan to purchase T-Mobile USA, even though they agreed on Tuesday to let the companies withdraw their request for approval.

AT&T and T-Mobile USA owner Deutsche Telekom AG said last week they wanted to withdraw their application with the Federal Communications Commission to focus on defending the transaction from an antitrust lawsuit brought by the U.S. Justice Department.

The FCC released on Tuesday an FCC staff report that found the touted benefits of the transaction do not outweigh the competitive disadvantages.

FCC officials cited staff findings that the deal would significantly diminish competition and lead to massive job losses.

The staff report also concluded the merger would not result in significantly more build-out of next generation 4G wireless service than would occur absent the transaction.

AT&T called the FCC's decision to release the report "troubling."

"It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place," said Jim Cicconi, AT&T's senior executive vice president of external and legislative affairs.

He added the report had not been made available to AT&T prior to the public release.

"We have had no opportunity to address or rebut its claims, which makes its release all the more improper," he said.

AT&T has argued the deal will accelerate its expansion of high-speed wireless service to nearly all Americans and create jobs.

An antitrust expert with telecommunications experience expected the report would be troubling for AT&T during its court battle.

Public interest groups had urged the FCC to release the report, saying it likely came to conclusions AT&T would rather have kept quiet.

The FCC said the companies were free to come back to the commission with a new application.

FCC Chairman Julius Genachowski said the agency's review has been focused on "fostering a competitive market that drives innovation, promotes investment, encourages job creation and protects consumers.

"These goals will remain the focus if any future merger application is filed," he added.

The Justice Department went to court in August to oppose AT&T's takeover of T-Mobile on antitrust grounds. A trial in that case is due to begin on February 13.

(Reporting by Jasmin Melvin; editing by Andre Grenon)

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