Bloomberg News

Federal AT&T-T-Mobile Suit Joined by New York, Six Other States

September 17, 2011

Sept. 17 (Bloomberg) -- The U.S. lawsuit seeking to block AT&T Inc.’s acquisition of T-Mobile USA Inc. was joined by seven states as their attorneys general said the proposed $39 billion deal would hurt competition and raise wireless telephone prices.

The states joining the amended complaint filed yesterday by the U.S. Justice Department in federal court in Washington were New York, California, Massachusetts, Washington, Ohio, Pennsylvania and Illinois.

Participation by the states bolsters the Justice Department’s position and means any negotiated settlement of the case would have to win the states’ approval, said Herbert Hovenkamp, a professor and antitrust expert at the University of Iowa College of Law.

“If the federal government wants to go for a settlement and the states don’t like it, they can hold out,” Hovenkamp said in an interview. “The judge would have to listen to their complaints.”

The government’s antitrust suit claims that the merger of the two companies, which would make Dallas-based AT&T the biggest wireless carrier in the U.S. and cut the number of national competitors to three from four, is anticompetitive.

Michael Balmoris, a spokesman for AT&T, said 11 state attorneys general support the deal.

‘Expedited Hearing’

“We will continue to seek an expedited hearing on the Justice Department’s complaint,” he said in an e-mail. “On a parallel path, we have been, and remain, interested in a solution that addresses the department’s issues with the T- Mobile merger.”

AT&T Inc. and the U.S. Justice Department yesterday filed an agreed-upon proposal for managing the case, with the exception of a dispute over a trial date. AT&T is pushing to start on Jan. 16 while the U.S. proposes March 19, according to the filing.

The case management plan sets deadlines for submitting witness lists, taking sworn statements and exchanging documents. Depositions of witnesses will be limited to 30 per side, according to the agreement.

U.S. District Judge Ellen Segal Huvelle has set a hearing for Sept. 21 on the scheduling and told the parties to be prepared to discuss settlement options.

The bipartisan group of state officials provided “invaluable assistance” in the probe that led to the lawsuit’s filing on Aug. 31, the department said in a statement.

Democrats, Republicans

The attorneys general of New York, California, Massachusetts and Illinois are Democrats while their counterparts in Ohio, Pennsylvania and Washington are Republicans.

“Blocking this acquisition protects consumers and businesses against fewer choices, higher prices, less innovation, and lower quality service,” Illinois Attorney General Lisa Madigan said in an e-mailed statement.

New York Attorney General Eric Schneiderman, who helped coordinate the states’ group, said the proposed merger would also reduce access to “low-cost options.”

Tom Sugrue, T-Mobile senior vice president of government affairs, said the Bellevue, Washington-based company remains confident the acquisition will proceed because of the benefits it offers consumers, businesses, and the U.S. economy. The merged company will spur “greater innovation, enhanced competition and increased jobs,” he said in a statement.

Sprint Nextel

Sprint Nextel Corp., the industry’s third-largest player and which filed its own suit opposing the deal, welcomed the attorneys general’s move, Vonya McCann, Sprint’s senior vice president for government affairs, said in an e-mailed statement.

Yesterday, Sprint filed court motions asking to be included in coordinated proceedings with the Justice Department, as well as motions about how confidential evidence should be handled in the case and scheduling issues.

If the judge approves Sprint’s request, it will put all the cases “on the same track so related matters can be dealt with efficiently by the court and all concerned parties to the suit,” said company spokesman John Taylor.

Connecticut Attorney General George Jepsen said in a statement he applauds the states joining the suit and stayed out only to conserve his office’s resources for other matters.

The case is U.S. v. AT&T Inc., 11-cv-01560, U.S. District Court, District of Columbia (Washington).

--With assistance from Jeff Bliss in Washington, Andrew Harris in Chicago and Karen Freifeld and Patricia Hurtado in New York. Editors: Fred Strasser, Mary Romano

To contact the reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Tom Schoenberg in federal court in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net;


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