The Justice Department asked a Federal Judge for a delay in an anti-trust suit being brought against telecom giant AT&T (T) over their $39 billion big to acquire T-Mobile USA from Deutsche Telekom AG (DTEGY). It marks just another chapter in the complicated legal wrangling by AT&T, the FCC, and the justice department over the deal.
FCC Does Not Approve
AT&T exercised an intriguing legal strategy earlier this week when it opted to pull its FCC filing last Tuesday. The company cited a desire to focus on the anti-trust lawsuit from the Justice Department before reapplying with the FCC as well as concerns over how the FCC would measure wireless spectrum in determining whether or not AT&T would have too much. The FCC responded only hours later by releasing a 109-page report detailing the issues it saw with the potential deal. “By combining these two nationwide providers, the proposed transaction would result in an increase in both subscriber and spectrum concentration that is unprecedented in scale,” the document stated, warning that the merger would “lead to a substantial lessening of competition” and a “net loss of direct jobs.”
AT&T was angry over the reports release. “The FCC has recognized that it is required by its own rules to dismiss our merger application,” AT&T senior executive vice president of external and legislative affairs Jim Cicconi said. “This makes all the more troubling their decision to nonetheless release a preliminary staff report on the merger. This report is not an order of the FCC and has never been voted on. 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. It has no force or effect under law, which raises questions as to why the FCC would choose to release it. The draft report has also not been made available to AT&T prior to today, so we have had no opportunity to address or rebut its claims, which makes its release all the more improper.”
Judge Dissatisfied at Legal Strategy
However, Federal Judge Ellen Huvelle has cast serious doubt on the efficacy of that plan by pushing back the potential trial date and expressing distaste at AT&T's attempt to play hardball. Justice Department lawyers asked to postpone of withdraw its case against AT&T until the company refiles its application with the FCC. Without FCC approval looming, Huvelle said she saw no reason to move the trial along with any speed, stating "You could change the deal in a month and everybody's time will be wasted," while AT&T lawyer Mark Hansen argued to the contrary, saying "We're not playing some strategic game." Huvelle called for the Justice Department to file its motion by Tuesday of next week and set a court date for Thursday. If the trial is delayed or canceled, it could mean the end of the ailing merger deal, announced in May, as Deutsche Telekom may pull out if the trial doesn't come early next year.
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