AT&T strategy annoys judge in T-Mobile case

WASHINGTON Fri Dec 9, 2011 4:52pm 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

WASHINGTON (Reuters) - AT&T's decision to focus on its antitrust battle with the U.S. Justice Department for its purchase of T-Mobile may have backfired, irritating the judge overseeing the case and laying the groundwork for a possible deal-killing delay.

The Justice Department said on Friday it would seek to stay or dismiss its lawsuit to stop the $39 billion deal, saying it was effectively dead without approval from telecommunications regulators.

"It's not a real transaction until they file with the FCC," Joseph Wayland, the Justice Department's lead attorney in the case, told U.S. District Judge Ellen Huvelle during a status hearing on the case.

AT&T and Deutsche Telekom's T-Mobile moved in November to withdraw their filing with the Federal Communications Commission to focus on the antitrust battle.

Both regulators have to give their blessing to the deal, and the FCC emerged recently as a second potent source of opposition by moving to refer the merger to an internal FCC judge and by issuing a staff report savaging the deal for curbing competition and destroying jobs.

Wayland said the government planned to file next week. It was unclear when Huvelle would rule on the motion.

AT&T's attorney Mark Hansen repeatedly pressed Huvelle on the need to move on with the current trial, slated to begin in February, arguing that the FCC and the Justice Department court fight were largely parallel.

"The issues in the antitrust case (at the district court) are the same as the FCC," he said, saying that if they won in court they could then refile with the FCC.

But Huvelle repeatedly expressed skepticism about AT&T's desire for a speedy resolution, citing withdrawal of the FCC application and potential changes in the deal reported in the media.

"It's a bit presumptuous to say nothing has changed," Huvelle said during an extended discussion with Hansen. "You could change the deal in a month... We have no confidence that we're not being spun."

Hansen argued that an extended delay would give the Justice Department effectively a veto on the deal without having to prove the merits of its antitrust case in court. "We are committed to concluding this transaction," he said.

AT&T, which has already set aside $4 billion in cash and spectrum to give T-Mobile in case the deal fails, faces a final deadline of mid-September to get the transaction done.

"What's clear is that this deal is hanging on by its fingernails," said Evan Stewart, an antitrust expert with Zuckerman Spaeder LLP. "Will there be a trial? Hard to believe."

A former FCC official, who asked not to be named, said that AT&T's strategy, while frustrating for the judge, could well be legal.

"AT&T has a reasonable argument that no law requires it to seek approvals in any particular order and that a win in the DOJ case would make FCC approval extremely likely," said this former official.

But, he added: "In the end, though, this is just another potentially crippling obstacle for a deal that is pretty close to dead."

Wayne Watts, AT&T's general counsel, reiterated on Friday the company's view that the deal would increase wireless capacity and efficiencies. "We are eager to present our case in court," he said in a statement.

Sprint and regional carrier C Spire Wireless have also filed private lawsuits to stop the AT&T deal.

The case is USA v. AT&T, T-Mobile USA Inc and Deutsche Telekom AG, U.S. District Court for the District of Columbia, case No. 11-1560. Also before the court are: Sprint Nextel Corp v. AT&T Inc et al, No. 11-1600 and Cellular South v. AT&T, No. 11-1690.

(Reporting by Diane Bartz with additional reporting by Jasmin Melvin in Washington and Nicola Leske in New York; Editing by Tim Dobbyn)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see
Comments (3)
Wulff wrote:
Litigation for its own sake by government on behalf of no one but themselves. How about we let the merger take place and litigate if it turns out to be what these jokers fear. Then they can sue and fine to their hearts content in a court of law. Waht a waste.

Dec 09, 2011 9:03pm EST  --  Report as abuse
ConstFundie wrote:
I disagree with Wulff. This merger should absolutely be stopped at every level. Its purpose is purely monopolistic and aimed at shrinking competition and free enterprise. The last thing that we need is to give more allowance to too-big-to-fail-and-compete companies that already have too much influence over government.

Dec 10, 2011 2:05am EST  --  Report as abuse
ThePup wrote:
I have to join ConstFundie’s camp on this one. I think this is a fundamental problem with the world today. Business and government are almost the same thing. From my veiw it gives people more of what they want. More toys, better cars. more house. It also blurs the line of “what is need and what is want” . So people buy more than they need, get in debt more than they want, and when they can’t get any more in debt, the economy stalls. That is how the run things, and that is why we could never achieve balance. How many people REALLY need a smart phone ?

Dec 10, 2011 5:41pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

How to get out of debt

Financial adviser Eric Brotman offers strategies for cutting debt from student loans and elder care -- and how to avoid money woes in the first place.  Video