U.S. Files to Block AT&T, T-Mobile Merger

The U.S. Justice Department sued to block AT&T Inc.’s proposed $39 billion takeover of T-Mobile USA Inc., saying the deal would “substantially lessen competition” in the wireless market.
The government is seeking a declaration that AT&T’s takeover of T-Mobile, a unit of Deutsche Telekom AG (DTE), would violate U.S. antitrust law, according to a complaint filed today in federal court in Washington. The U.S. also asked for a court order blocking implementation of the deal, the largest announced acquisition of the year, according to data compiled by Bloomberg.
“I don’t see any room to settle the case,” said Bert Foer, head of the American Antitrust Institute in Washington, in an interview. “They have clearly drawn a line in the sand.”
AT&T Chief Executive Officer Randall Stephenson’s proposed purchase of Bellevue, Washington-based T-Mobile, announced in March, would combine the second- and fourth-largest carriers to create a new market leader ahead of No. 1 Verizon Wireless. The new company would dwarf current No. 3 carrier Sprint Nextel Corp. (S), which argued against the deal.
“AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market,” the government said in court papers. Dallas-based AT&T fell as much as 5.5 percent in New York trading after Bloomberg News broke the news of the lawsuit.
Government Suit
AT&T said it was surprised by the government suit and that it will ask for an expedited hearing in the matter.
“We have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated,” Wayne Watts, AT&T’s general counsel, said in a statement. He said the company intends to fight the litigation.
Bonn-based Deutsche Telekom said in an e-mailed statement that it too would contest the U.S. government suit.
“DOJ failed to acknowledge the robust competition in the U.S. wireless telecommunications industry and the tremendous efficiencies associated with the proposed transaction,” the German company said, adding it appreciates the Justice Department’s “willingness to discuss possible remedies” to address the competitive concerns.
Big Merger Challenged
“The important point is that the Justice Department has gone ahead and challenged a big merger of competitors, which it just hasn’t done,” said Eleanor Fox, a law professor at New York University. “People were getting used to seeing press releases saying the Justice Department has agreed to merger XYZ with a spinoff.”
The suit may be part of a negotiating strategy, said David Balto, a Washington-based antitrust attorney. The U.S. may have decided “the best way to have strength in the settlement talks is to file a lawsuit,” he said in an interview.
Other experts disagreed, saying the Justice Department wouldn’t have sued if it was still seeking a settlement that would allow the merger to go through.
“This isn’t just a negotiating strategy, this isn’t just a placeholder, they do mean to block it,” Rebecca Arbogast, a Washington-based analyst with Stifel Nicolaus & Co., said in an interview, citing the detailed federal complaint. “There still is some room for negotiating a settlement, but the likelihood seems narrow.”
Entire Analysis
Foer, of the American Antitrust Institute, which supports antitrust enforcement and opposes the merger, said the Justice Department would have to drop their entire analysis on the national telecommunications market and settle it by local markets if it was seeking a negotiated solution.
“If it could be settled, they would still be talking about it,” he said.
Rejection by regulators would leave AT&T liable to pay Deutsche Telekom $3 billion in cash, to give T-Mobile USA wireless spectrum and to reduce charges for calls into AT&T’s network, a package valued at as much as $7 billion, Deutsche Telekom has said.
Cancellation Fee
“Given the size of the cancellation fee that was negotiated into this agreement, AT&T has the incentive to fight,” said Andrew Gavil, a law professor at Howard University in Washington. “The fact that the Justice Department is challenging the deal doesn’t mean they won’t negotiate a resolution at some point.”
AT&T had been working to bolster its case as analysts became less certain that the acquisition would be approved. A Stifel Nicolaus survey of 32 polled observers published Aug. 11 found sentiment the deal would win clearance had slipped since early July, with fewer than half saying it would be approved.
AT&T pledged to bring 5,000 call-center jobs back to the U.S. from other countries once the merger closes and that it wouldn’t cut any U.S. wireless call-center jobs as part of the deal. The jobs plan doesn’t change AT&T’s forecast for savings from the union, it said.
Stocks Fall
AT&T fell $1.14, or 3.9 percent, to $28.48 in New York Stock Exchange composite trading after declining as much as $1.62 today. Deutsche Telekom’s American depositary receipts dropped 7.3 percent to $12.78. Each ADR represents one ordinary share. Overland Park, Kansas-based Sprint’s shares jumped as much as 9.9 percent on the news before closing at $3.76, a 5.9 percent gain.
Some U.S. lawmakers have said the deal may reduce competition and raise consumer costs. The Federal Communications Commission this month asked AT&T for more information about how the deal would expand high-speed wireless service in the U.S. Cable and satellite carriers including Dish Network Corp. and Cablevision Systems Corp. have also protested the deal.
The FCC said that it was continuing its review. In an e- mailed statement FCC Chairman Julius Genachowski said the record before the agency “raises serious concerns about the impact of the proposed transaction on competition.”
New Models
AT&T submitted new economic models to the FCC in July that it said showed the merger would reduce prices and increase service in large metropolitan markets. The models offer “further detailed support” for arguments that the merger will lessen strains on the company’s wireless network, lower costs and increase quality, AT&T said in the filing.
The combination would reduce wireless communication competition in the U.S., driving prices higher, making service worse and offering fewer products for U.S. consumers, the Justice Department said today in a statement.
“AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers,” the government said in the statement. “AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor.”
The Acquisition
With the acquisition, AT&T would displace Verizon Wireless, which is owned by Verizon Communications Inc. (VZ) and Vodafone Group Plc, as the No. 1 U.S. wireless carrier. Together, AT&T and Verizon control 80 percent of profits in the market, according to the FCC’s annual wireless report published June 27.
A merged AT&T and T-Mobile would have about 132 million connections to mobile wireless devices and more than $72 billion in mobile wireless telecom service revenue, the U.S. said in its complaint.
“Any way you look at this transaction, it is anticompetitive,” Sharis Pozen, the acting head of the Justice Department’s antitrust division, said at a news conference.
Pozen said the department interviewed dozens of people and examined millions of documents before suing and decided to act to stem any speculation about the antitrust review. The department’s “door is open” to discuss a remedy with AT&T, she said.
“This is just the first stage,” Todd Rosenbluth, an equity analyst at Standard & Poor’s in New York who recommends buying AT&T and Sprint. “AT&T could consummate the deal if it announces plans to shed some of the assets where they’ve got some market-share overlap.”

http://www.bloomberg.com/news/2011-08-31...erger.html

The more competition the better.

The more competition the better.

And less I have to pay for my goddamned phone bill.

...
Right, "robust" competition in the US. Like our internet providers. All one of them in any given area.

I was listening to Rush Limbaugh when he was talking about this.

"AT&T wanted to acquire T-Mobile. In doing so, they stated that they would bring 5,000 jobs from overseas back home. The Obama Regime, however, would not let this happen, and used their DoJ powers to block the merger under the guise of "consumer protection"! It's fairly obvious that Obama doesn't want jobs in the US and would rather have them abroad. Remember, the Obama Regime is for workers anywhere not in the United States, and that's why we have our current bad state of unemployment."

Like I've always stated, Limbaugh is the best comedian on the radio.

Like I've always stated, Limbaugh is the best comedian on the radio.

I used to watch his TV show for the same reason.
I was scarred for life when I was informed it was intended to be serious. Now I can't watch the daily show or the colbert report without trepidation.

Summary please?

Summary please?

LTR.
If you don't want to read the current events, don't read here. The title is all the summary you need.

LTR.
If you don't want to read the current events, don't read here. The title is all the summary you need.

Ok. I wonder what will happen If the didn't wasn't made then?

LTR.
If you don't want to read the current events, don't read here. The title is all the summary you need.

I think this forum is slowly turning into /. before our eyes. Now all that needs to happen is people that post the summaries don't read the articles.

I think this forum is slowly turning into /. before our eyes. Now all that needs to happen is people that post the summaries don't read the articles.

That transformation had already begun in the speakeasy, hence the spin off to preserve some small island of hope for intelligence.

What good will the merger itself bring? I can't exactly say I am too excited about joining AT&T.

What good will the merger itself bring? I can't exactly say I am too excited about joining AT&T.

For consumers? None whatsoever. For the company? It would give them a near-monopoly and which would lead to them boosting prices and all sorts of horrible things. Competition keeps all of that down.

All you need to do is look at Nexon to see why you don't want something like this. Nexon has an essential monopoly of over the 2D side-scrolling MMORPG market. There are others but none are big enough to compete on any level, realistically. Having that monopoly allows Nexon to do whatever the hell they want because consumers have two choices: play or don't play. If you don't like what they're doing then too bad because there's no where else for you to go in the same market.

It's even worse with cell phones because it's a near-necessity at this point. So imagine if one company had a monopoly over THAT market. They could increase prices, get rid of free/cheap/unlimited deals, or potentially even allow you to use certain models of phones, putting another market in jeopardy.

Variety isn't just the spice of life, it's the most important part of fair business on the consumers end.

For consumers? None whatsoever. For the company? It would give them a near-monopoly and which would lead to them boosting prices and all sorts of horrible things. Competition keeps all of that down.

I guess we could count T-mobile users getting to buy iPhone 5's at a discounted price, but that's hardly worth their questionable service quality. It's a fairly moot point as well, seeing how Apple decided to go big this time.

Good. I was really really hoping they would not approve the merger. If AT&T became AT&T&T, that would leave Verizon, and lolSprint to compete against them. Verizon could possibly compete, but Sprint wouldnt last long and would probably fold. I mean, its bad enough that AT&T prompted the other companies to move to tiered data plans, this would just make it hell for cell phone users.

Perhaps Verizon would buy out Sprint, it seems reasonable to me if this were to go through, as Verizon would want to be a bit bigger.

You guys are saying as if T-Mobile is even a threat.

In my school every makes fun of me and my phone .

Oh, well, I'm pretty sure the DoJ will stop the merge, or Verizon will choose to buy Sprint, leaving the DoJ to remove the order since the company that made the complaint would dissapear. But in order for AT&T to have a monopoly, I think it would require a lot of time after the merge.

A Dutch news agency reported that AT&T would get 43% of the market share for telephones if they merged with T-Mobile. I have no idea about Verison's share, but with a share of almost 50% it would be a matter of time before it became an almost-monopoly market. I think it's a pretty good thing it didn't go on.
(Didn't read the main article posted here, since I figured I already red another article about it.)

A Dutch news agency reported that AT&T would get 43% of the market share for telephones if they merged with T-Mobile. I have no idea about Verison's share, but with a share of almost 50% it would be a matter of time before it became an almost-monopoly market. I think it's a pretty good thing it didn't go on.
(Didn't read the main article posted here, since I figured I already red another article about it.)

Things like this scare me when I think of Google's domination in the search field.