AT&T gets small wins in antitrust hearing

September 21, 2011

A federal judge Wednesday granted small wins to AT&T and T-Mobile in the first hearing of the Justice Department’s lawsuit to block the companies’ $39 billion mega-wireless merger.

Judge Ellen Huvelle, of the U.S. District Court of the District of Columbia, set a Feb. 13 trial date — earlier than Justice requested — and declined for now rival Sprint Nextel’s request to join the suit, which would have complicated the proceedings.

The decisions take some pressure off AT&T as it works to avoid steep penalties if the deal isn’t completed by September 2012. By leaving Sprint out of Justice’s case, AT&T and T-Mobile won’t have to deal with new arguments from a rival to block the deal. And if a settlement is reached out of court, the companies won’t have to deal with more opponents, analysts said.

Huvelle, who has a reputation as an efficient and no-nonsense judge, said Sprint’s participation would prolong the trial, which she said would last four to six weeks.

And she acknowledged the business constraints facing the companies if litigation runs long.

“It’s in no one’s interest to be overwhelmed” by the process, Huvelle told a courtroom packed with reporters, antitrust attorneys and federal officials.

AT&T has argued that the trial date is significant because of key deadlines in the merger contract. If the deal isn’t completed by September 2012, AT&T would have to hand over $3 billion in cash and an estimated $3 billion worth of spectrum and fees to T-Mobile’s parent, Deutsche Telekom.

“We need to have the cloud of uncertainty removed,” said AT&T attorney Mark Hansen. “We’re already a month beyond where we want to be.”

AT&T said the company is still interested in a settlement as it prepares for trial.

“We are hopeful that we can reach a solution with the DOJ that addresses their concerns, but if not, we will be well prepared for trial,” the company said in an e-mailed statement.

But a person familiar with Justice’s thinking said government officials will find it difficult to reach a compromise that allays its concerns that the merger violates antitrust laws by overly concentrating national and local markets.

Justice’s acting antitrust head, Sharis Pozen, has said the “door is open” to discussions with the firms. But a person who spoke on the condition of anonymity because of the ongoing litigation said it appeared that federal officials were fully preparing to litigate the case.

Justice has said the deal — which would combine the second- and fourth-largest carriers — would lead to higher cell phone prices and fewer consumer options for service plans and devices.

Cecilia Kang is a national technology reporter, writing about tech and Internet policies at the Federal Communications Commission and Federal Trade Commission and how regulations affect businesses and consumers.
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