AT&T, T-Mobile merger in hands of Judge Huvelle

The Justice Department’s lawsuit to block the mega-deal between AT&T and T-Mobile now rests in the hands of a federal judge who has ruled against the government before in an antitrust case with some parallels to this one.

U.S. District Judge Ellen S. Huvelle of the District of Columbia — who was described as a “judicial machine” because she processes cases so efficiently — in 2001 ruled against the Justice Department’s attempts to block a merger between two dominant computer-disaster-recovery companies.

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Sept. 1 (Bloomberg) -- Ralph Schlosstein, chief executive officer of Evercore Partners Inc., talks about the U.S. Justice Department's antitrust lawsuit against AT&T Inc.'s $39 billion takeover bid for T-Mobile USA Inc. Schlosstein, speaking with Betty Liu on Bloomberg Television's \

Sept. 1 (Bloomberg) -- Ralph Schlosstein, chief executive officer of Evercore Partners Inc., talks about the U.S. Justice Department's antitrust lawsuit against AT&T Inc.'s $39 billion takeover bid for T-Mobile USA Inc. Schlosstein, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses investment strategy and the impact of the European debt crisis and U.S. growth uncertainty on global financial market volatility. (Source: Bloomberg)

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Unconcerned that the combined company would control 70 percent of that market, Huvelle explained that the computer-disaster business was constantly changing and that competitors were able to enter the market.

That case and a long list of her other decisions provide a window into the thinking of Huvelle, who is now set to oversee the most significant antitrust action in recent memory.

Huvelle, 63, is no stranger to highly politicized cases, presiding over the 2008 corruption case of lobbyist Jack Abramoff and the Securities and Exchange Commission’s $75 million mortgage-meltdown settlement with Citigroup in 2010. As an attorney in 1982, she defended Don King in a tax fraud case.

In an interview Wednesday, Huvelle declined to comment on the specifics of AT&T’s $39 billion proposed merger with T-Mobile. But she made it clear she had little interest in the politics surrounding the case.

Half of the cases before her have “a lot of noise around them,” she said. “But I think my job is to look at the law and the facts.”

Already, the battle over the wireless mega-merger has generated debate beyond what usually arises in antitrust matters. AT&T has decried the Justice Department’s decision to challenge the deal in court as bad for the economy because the merger would create jobs for tens of thousands of Americans. Department officials argued that their efforts to block the merger will save jobs.

For her part, Huvelle said she didn’t know “how the jobs issue will fit” in her analysis.

Appointed by President Bill Clinton to the District Court in 1999 , Huvelle has a long record on antitrust cases. In 2001, she turned away the Justice Department’s efforts to prevent a $700 million deal between computer-disaster-recovery companies Comdisco and SunGard.

“The market was even more concentrated for Comdisco and SunGard [than AT&T and T-Mobile], but she was dismissive of that because she understood that we needed to also look at what other alternatives customers have,” said David Balto, an attorney who represented SunGard.

“So she may very well look at AT&T and T-Mobile and ask how that industry is changing and what kinds of alternatives consumers can find,” Balto said.

AT&T and T-Mobile, as a combined company, would serve 132 million customers, about 44 percent of the market.

The Justice Department has argued that the marriage would overly concentrate the industry and harm consumers by leaving them with higher bills and fewer choices. If the deal goes through, about 80 percent of wireless users would be customers of AT&T and its main rival, Verizon Wireless.

T-Mobile has been a low-cost alternative to AT&T, Verizon and Sprint Nextel, Justice Department officials have said. The company “places important competitive pressure on its three larger rivals,” the agency noted in its complaint.

What may be critical in the case is how Huvelle defines market concentration. Justice Department officials say the combined company would hold too much of the U.S. market. But AT&T has argued that on a region-by-region basis, it is hardly dominant, as new regional carriers such as Cricket and Metro PCS are quickly gaining subscribers.

Antitrust experts note that the burden will be on the Justice Department, not AT&T, to prove its claims.

Huvelle “has experience with merger analysis, so she is familiar with the law, familiar with the legal standards, but may be demanding of the government in terms of proof,” said Andy Gavil, a law professor at Howard University.

Beyond her decision on Comdisco and SunGard, Huvelle has taken high-profile cases involving the government.

Last year, she approved the settlement between the SEC and Citigroup but said the amount was not high enough to deter big banks from making bad mortgage decisions. In 2009, she scolded Obama administration lawyers for torturing Guantanamo detainee Mohammed Jawad and keeping him imprisoned for six years during a case the ACLU brought against the Obama administration.

“The fact that the government is bringing a case before her doesn’t mean a lot to her,” said Steven Axinn, a partner at the Axinn, Veltrop, Harkrider law firm who defended SunGard. “Keep in mind that as a former lawyer, she defended a lot of people the government has indicted.”

Direct and efficient, she demands only the essential facts, observers said.

In the SunGard and Comdisco case, Huvelle showed impatience with Justice Department lawyers for bringing five boxes of files to their first meeting, according to Axinn. She sent the attorneys away, demanding that they come back with no more than 25 pages outlining their arguments.

She also agreed with the companies’ request for a decision within three weeks. That was good for Comdisco, which was facing a pending decision in bankruptcy court.

AT&T said it will ask for an expedited trial, as well. The company will have to hand over $3 billion in spectrum and other assets if the deal isn’t approved by September of next year.

 
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