Bloomberg News

FCC Expresses Concern on AT&T Deal as Justice Challenge Unfolds

September 01, 2011

(For more news on the deal, see {EXT6})

Sept. 1 (Bloomberg) -- Federal Communications Commission Chairman Julius Genachowski expressed reservations about AT&T Inc.’s proposed $39 billion purchase of T-Mobile USA Inc. as antitrust regulators challenged the deal.

The record before the FCC “raises serious concerns about the impact of the proposed transaction on competition,” Genachowski, a Democrat, said in an e-mail yesterday. The agency’s process “is not complete,” he said.

The statement didn’t say when the FCC might decide AT&T’s application to form the largest U.S. mobile-phone provider by combining the second- and fourth-largest wireless carriers. The Justice Department sued in federal court in Washington yesterday to block the deal, saying it would lessen competition.

The FCC is on the 89th day of a review that is to take 180 days, according to the agency’s website. The agency can stop and restart its informal 180-day clock, and did so between July 20 and Aug. 26 as it awaited more data from AT&T.

A decision on the transaction would need to be made by a vote of the FCC’s politically appointed commissioners, who comprise three Democrats and one Republican following a resignation.

A vote to challenge a merger sends the deal to an administrative law judge at the FCC, who decides whether to accept the commissioners’ action.

‘Substantial Questions’

That process would take “months at the very least,” Andrew Jay Schwartzman, policy director of Media Access Project, a Washington-based nonprofit law firm, said yesterday during a news conference.

With the challenge by the Justice Department, “we have an increased likelihood the FCC will find there are substantial questions that justify a hearing,” Schwartzman said.

The FCC considers a broader array of factors than the antitrust standard used by the Justice Department, which focuses on how competition is affected, Schwartzman said.

“I don’t think they’re going to stop,” he said, referring to the FCC’s review.

The Justice Department has worked with the FCC “very closely” on the merger, Sharis Pozen, the acting head of the department’s antitrust division, said yesterday at a news conference.

The FCC has never approved a significant merger being challenged in court by the Justice Department, said an FCC official who spoke on condition of anonymity because the agency’s review isn’t concluded.

‘Stop the Process’

“The FCC is most likely going to stop the process and wait until the court decides,” Andrew Lipman, a Washington-based communications lawyer with Bingham McCutchen LLP, said in an interview.

“It’s unlikely in the extreme that the FCC would go forward and approve the transaction while the matter is still pending in federal district court,” Lipman said.

The FCC’s other two Democratic commissioners also issued statements yesterday, with Michael Copps citing “numerous concerns” including the effects of the transaction on consumer choice and innovation, and Mignon Clyburn saying the agency is “carefully considering the competitive issues raised by the application.”

--Editors: Michael Shepard, Allan Holmes

To contact the reporter on this story: Todd Shields in Washington at To contact the editor responsible for this story: Allan Holmes at


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