AT&T, T-Mobile merger faces court challenge

The Journal Record
Sept. 1, 2011

The announcement on Aug. 31 that the Justice Department has sued to block AT&T’s proposed $39 million acquisition of T-Mobile USA will play out on one central issue: whether the transaction would substantially lessen competition or create a monopoly.

“AT&T and T-Mobile didn’t decide to go ahead with it knowing or having substantial belief that it was illegal; they obviously think they’ve got some points to be made,” said Kent Meyers, a director at Crowe & Dunlevy law firm in Oklahoma City. “The Justice Department didn’t sue knowing it to be legal; they’ve got some points to be made.”

Typically, such cases get worked out by dividing up the market, Meyers said. The fact that AT&T and T-Mobile are the second- and fourth-largest such companies matters less than where each is strong across the country and where the combined company would have a lock on the market, Meyers said.

“The way these types of mergers are usually negotiated is to divide it up market by market and say, ‘You can do this, but you can’t do that,’” he said. “Or one of the two companies could be required to divest itself of their assets in a market to a third party. It’s looking more according to competitive regions.”

Such government challenges to an acquisition were formerly unheard of, particularly during the George W. Bush years, Meyers said. But that has changed during Barack Obama’s administration.

“Obama’s antitrust division chief said she was going to significantly change the prior rules that apply to mergers and acquisitions and take a more proactive stance in challenging them,” Meyers said. “This is the government saying, ‘No, you’re getting too big and you’re threatening the competitive marketplace.’”

Oklahoma AT&T representatives declined to comment on the Justice Department’s lawsuit. T-Mobile released a statement saying it is disappointed in the DOJ’s action and will join AT&T in defending the merger.

http://journalrecord.com/2011/08/31/att-t-mobile-merger-faces-court-challenge-law/

 

Copyright © 2016 Crowe & Dunlevy. All Rights Reserved.