Will This Merger Ever Die?

Back in August, when the Department of Justice filed its antitrust lawsuit to halt AT&T's (NYSE: T  ) proposed merger with T-Mobile, Deputy Attorney General James M. Cole said the deal "... would result in tens of millions of consumers ... facing higher prices, fewer choices and lower quality products for mobile wireless services ..."

In November, Federal Communications Commission Chairman Julius Genachowski said "AT&T's acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws."

That statement caused AT&T to withdraw its merger application from the FCC on Thanksgiving Day.

Now, according to Dow Jones Newswires, the DOJ may be thinking that its lawsuit may not be necessary because of AT&T's withdrawing its application. DOJ lawyer Joseph Wayland said department options will include either asking for a stay of the court proceedings, or withdrawing the case until AT&T and T-Mobile owner Deutsche Telekom reapply to the FCC.

District Court Judge Ellen S. Huvelle, the judge presiding over the DOJ proceedings, is said to be really annoyed with AT&T for withdrawing the application and wants to find out if it is even worth it to keep to the current trial schedule, as AT&T would like. "The landscape has changed -- it has clearly changed," she said. The trial had been scheduled to take place in February.

The merger deal has a March 20 deadline, but can be extended until September.

Couple the above with the FCC's releasing a preliminary staff report that essentially rebutted AT&T's claims of improved service to the nation's consumers, and the promise of almost 100,000 new jobs, it doesn't look promising for this merger to stay alive.

It's obvious that the FCC and the DOJ fear this deal would create a duopoly of AT&T and Verizon (NYSE: VZ  ) controlling 80 percent of the mobile subscribers nationwide, which would essentially leave Sprint Nextel (NYSE: S  ) a distant third and with little competitive power.

In a change of tactics, AT&T released a statement today saying that it and Deutsche Telekom have "... advised Judge Huvelle this morning that they wish to stay any further court proceedings until January 18, 2012, to allow the two companies time to evaluate all options."

I wonder if one of those options might be pulling the plug on this dying deal?

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Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On December 12, 2011, at 8:27 PM, conradsands wrote:

    Consumers are finally noticing that AT&T and Verizon = The Most Expensive Wireless Plans in America. We know where Verizon and AT&T (both in the top 5 for corporate lobbying) get all that money to run commercials 24x7, pay out huge “fat cat” executive bonuses and hire armies of lawyers and lobbyists to push the U.S. market into a wireless industry duopoly -- the American consumer. This is how AT&T and Verizon fashion themselves as brilliant … with their political use of money.

    Taking into account the whole U.S. market, a combination of AT&T and T-Mobile would increase the Herfindahl-Hirschman Index (HHI), a widely accepted measure of market concentration, to 3,216 from 2,848, according to a Bloomberg analysis. Any score above 2,500 indicates a highly concentrated market, and any increase of more than 200 points clearly enhances market power, according to federal guidelines.

    If this ridiculous deal goes through, Sprint will be the only low-priced post-paid national wireless carrier left in the United States. T-Mobile customers are already fleeing to Sprint because they know they won’t get low prices from AT&T or Verizon. But AT&T and Verizon are two of the top corporate lobbyists in the country, so beware of how things could “mysteriously” turn in this case.

    “It’s only a slight overstatement to say that if they weren’t going to block this one, the Justice Department might as well just throw the antitrust guidelines out the window,” said Herbert Hovenkamp, professor of law at the University of Iowa, who is considered by many to be the dean of American antitrust law. “This merger clearly seems to violate them.”

  • Report this Comment On December 12, 2011, at 8:27 PM, conradsands wrote:

    It must be nice to be a deep-pocketed duopolist in this economy. According to the report “Corporate Taxpayers & Corporate Tax Dodgers 2008-10,” two of the 25 companies with the largest total tax subsidies were AT&T at #2 ($14.5 billion) and Verizon at #3 ($12.3 billion). Also, there were 30 corporations that paid less than nothing in aggregate federal income taxes over the same period. These 30 companies, whose pretax U.S. profits totaled $160 billion over the three years, included Verizon. The report states the laws that allow this were not enacted in a vacuum, but rather were adopted in response to relentless corporate lobbying, threats and campaign support.

    AT&T remains the worst carrier in the United States, according to an annual customer satisfaction survey compiled by Consumer Reports. The mobile provider ranked dead last for the third year in a row.

    In other news, in a poll that asked 4,040 smartphone users how many dropped calls they had experienced in a three-month period, AT&T — carrier of Apple's iPhone and iPad mobile devices — came in dead last among the country's four largest carriers.

  • Report this Comment On December 12, 2011, at 8:28 PM, conradsands wrote:

    AT&T’s Dirty Money at Work …

    Snippets from CNN story …

    AT&T lobbyists push for T-Mobile deal

    For years, AT&T has been one of the biggest political and lobbying forces in Washington, D.C. Last year, it spent $15.3 million and had 93 lobbyists on its roster, including six former lawmakers. Germany's Deutsche Telekom spent $3 million on lobbying for T-Mobile USA in 2010, armed with 41 lobbyists and one former lawmaker.

    Many lawmakers have a personal interest in seeing AT&T do well. AT&T ranked as the sixth most popular investment among members of the House and Senate in 2009, the most recent year for which such data is available, according to the Center for Responsive Politics.

    And AT&T is considered a heavy hitter during campaign election cycles. In 2010, donors with links to the company made nearly $4 million in campaign contributions to candidates running for federal office.

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