DOJ Drops Bombshell on AT&T; Seeks Court Order to Block T-Mobile Acquisition

The United States Department of Justice today announced that it has filed suit to block AT&T’s proposed $39 billion acquisition of T-Mobile USA.  According to DOJ, the suit, which was filed in the United States District Court for the District of Columbia, is being filed to block a transaction that “would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives.”

Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, went on to say that, “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”

Market and media analysts questioned DOJ’s surprise announcement given that the merger review, which started in March 2011, was expected to last at least a year. The Federal Communication Commission is also reviewing the proposed merger.

T-Mobile is a wholly-owned subsidiary of Bonn, Germany-based Deutsche Telekom AG, Europe’s largest telecommunications company.

Ironically, DOJ’s announcement came less than two and half hours after AT&T Chief Executive Officer Randall Stephenson announced that AT&T would be bringing back to the United States 5,000 wireless call center jobs currently outsourced overseas.

AT&T’s job repatriation plan was widely praised by civil rights organizations, which have called on the President to make job creation the administration’s number one domestic policy priority.

Caught by surprise by DOJ’s announcement, AT&T sounded a firm rebuttal.  Wayne Watts, AT&T Senior Executive Vice President and General Counsel, issued the following statement:

“We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.  We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed.  The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.  At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will:

• Help solve our nation’s spectrum exhaust situation and improve wireless service for millions.
•  Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population.
•  Result in billions of additional investment and tens of thousands of jobs at a time when our nation needs them most.

We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.”

Largely because of its impact on job creation, the merger has received the endorsements of nation’s labor unions, national intergovernmentals and civil rights organizations.    Today, in an interview with Politic365, Clayola Brown, president of the A. Philip Randolph Institute had this reaction to the day’s fast-moving developments:

“It’s a mystery why DOJ would choose this case for litigation.  Unlike most mergers, this one is structured to be an engine of job creation through spectrum aggregation and deployment.  “As DOJ seeks to promote competition, it should ask what competition means to someone who doesn’t have a job and can’t feed her family.  With an unemployment rate at Depression-era levels and a 20% wage gap, people of color in America clearly don’t have a fair opportunity to compete.

“The Congressional Black Caucus, the National Urban League and the NAACP have been calling for aggressive steps to create more good American jobs immediately.   AT&T was listening, and – with the greatest respect – DOJ should listen more closely as well.

“If we’re going to have a national debate about competition, let’s be sure that the debate includes this question:  how can all Americans have an opportunity to compete for, and win, economic security for their families?”

Alton Drew is a political analyst, commentator, and political economist. In short, a thought driver. In addition to being a contributing writer at Politic365.com, Mr. Drew blogs at Law and Politics of Broadband and The American Centrist. Follow him on Twitter @altondrew or visit his website at www.altondrew.com.

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