Bloomberg News

Sprint, Cellular South Ask AT&T Judge Not to Dismiss Cases

October 07, 2011

(Updates with comments from AT&T, Sprint and Cellular South from fifth paragraph.)

Oct. 7 (Bloomberg) -- Sprint Nextel Corp. and Cellular South Inc. asked a federal judge to reject AT&T Inc.’s bid to dismiss their lawsuits opposing its purchase of wireless carrier T-Mobile USA Inc., arguing antitrust law allows them to challenge the merger because of its effects on competition.

The companies filed their opposition to AT&T’s motion to dismiss today in federal court in Washington. AT&T argued that since companies are competitors, not consumers, they lack the right to bring an antitrust case.

“Those injuries to competitors, which align with harm to consumers, are ‘antitrust injuries,’ and create standing for a competitor,” Sprint and Cellular South responded in their filing. The merger could “injure competitors in ways that also injure consumers through higher prices, diminished service and reduced innovation,” the companies said.

Sprint, based in Overland Park, Kansas, brought its antitrust lawsuit on Sept. 6, less than a week after the U.S. sued to block the deal. As the third-biggest wireless carrier, Sprint said the proposed merger would weaken its ability to compete with AT&T, the second biggest, and Verizon Communications Inc., the market leader. The combination of AT&T and T-Mobile would form the country’s largest mobile phone company.

Competitors’ Right

“Competitors have the right to bring an antitrust complaint to stop AT&T’s proposed takeover of T-Mobile if they allege that the proposed transaction is likely to harm their ability to compete,” Sprint’s Vice President for Litigation Susan Haller said in a statement.

Sprint isn’t “trying to protect consumers -- who would clearly benefit from our merger with T-Mobile,” said AT&T’s Senior Executive Vice President and General Counsel Wayne Watts, in an e-mailed statement. “Instead, they are trying to protect themselves.”

Cellular South sued on Sept. 19 claiming the merger threatened to “substantially” cut competition. Cellular South, based in Ridgeland, Mississippi, changed its name to C Spire Wireless on Sept. 26, according to its website.

Cellular South filed a separate motion to remove from the record e-mails it said were improperly submitted by AT&T while misrepresenting what Cellular South had proposed in communications with AT&T.

E-Mail Evidence

AT&T said in the earlier filing that the competitive concerns raised by Cellular South weren’t legitimate, offering as evidence a March 21 e-mail from Cellular South’s Chief Executive Officer Hu Meena that proposed an agreement between the two companies on issues such as spectrum and roaming access.

“Such extraneous evidentiary material and related argument is procedurally improper,” Cellular South said.

Cellular South also refuted AT&T’s interpretation of Meena’s e-mail in the motion to dismiss.

“Mr. Meena was responding to AT&T’s request that Cellular South allow AT&T the opportunity to address Cellular South’s concerns about the merger before Cellular South took a public position on the merger,” Cellular South said in its filing. Cellular South never suggested that AT&T not engage in “facilities-based competition” with Cellular South in Mississippi, the company said.

‘Inappropriate Proposal’

Cellular South suggested in the e-mails that it “would not oppose the merger if AT&T would not engage in facilities-based competition in Mississippi,” said AT&T spokesman Mike Balmoris in an e-mail. “Such an extraordinary and inappropriate proposal simply confirms that what C Spire fears is competition, not an alleged lack of competition.”

The Justice Department sued Dallas-based AT&T and Bonn- based Deutsche Telekom AG’s T-Mobile unit on Aug. 31, arguing a combination of the two companies, which would make AT&T the biggest U.S. wireless carrier, would “substantially” reduce competition. Seven states and Puerto Rico joined the government’s case.

Sprint’s case is Sprint Nextel Corp. v. AT&T Inc., 11-cv- 01600, U.S. District Court, District of Columbia (Washington). Cellular South’s case is Cellular South Inc. v. AT&T Inc., 11- cv-01690, U.S. District Court, District of Columbia (Washington). The government’s case is U.S. v. AT&T Inc., 11-cv- 01560, U.S. District Court, District of Columbia (Washington).

--Editors: Mary Romano, Fred Strasser

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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