(Updates with excerpt from ruling in third paragraph.)
Nov. 2 (Bloomberg) -- AT&T Inc. can be sued by Sprint Nextel Corp. over its proposed purchase of T-Mobile USA Inc., a judge ruled, saying the fact that the company is a competitor doesn’t set up a bar to a private antitrust lawsuit.
U.S. District Judge Ellen Segal Huvelle in Washington said today that the suit by Sprint, and another by Cellular South Inc., can proceed. The judge limited the competitors’ cases against AT&T to Sprint’s antitrust claim regarding access to mobile devices and Cellular South’s claims over roaming fees as well as devices.
“Where private plaintiffs have successfully pleaded antitrust injury, the fact that they are defendants’ competitors is no bar,” Huvelle said in her ruling. She scheduled a hearing for Dec. 9 in the cases.
AT&T argued that Overland Park, Kansas-based Sprint can’t challenge the purchase under antitrust law because it’s a competitor rather than a consumer. It also contended that Sprint’s claims that the $39 billion acquisition would hurt its business are unfounded.
“They have to allege in the wireless market that they’d suffer anticompetitive harm,” Michael Kellogg, a lawyer for Dallas-based AT&T, told Huvelle during an Oct. 24 hearing. “They haven’t alleged any effects about the market.”
Cellular South Inc., based in Ridgeland, Mississippi, filed a similar lawsuit that AT&T also asked Huvelle to dismiss.
Sprint’s attorney, Steven Sunshine, told Huvelle at the Oct. 24 hearing that the merger would increase AT&T’s market power to secure deals for exclusive handsets.
‘Tip the Market’
“If the merger goes through, it will tip the market toward duopoly,” said Sunshine, a partner at Skadden, Arps, Slate, Meagher & Flom in Washington. “It will make it difficult for Sprint to get key inputs like handsets, as well as raise costs for roaming and backhaul.”
The combination of AT&T, the second-biggest mobile phone provider, and Bonn-based Deutsche Telekom AG’s T-Mobile unit would form the country’s largest wireless phone company, passing the current market leader Verizon Communications Inc. Sprint has lost money for 16 consecutive quarters.
The government’s case is U.S. v. AT&T Inc., 11-01560; Sprint’s case is Sprint Nextel Corp. v. AT&T Inc., 11-01600; and Cellular South’s case is Cellular South Inc. v. AT&T Inc., 11-01690, U.S. District Court, District of Columbia (Washington).
--With assistance from Sara Forden. Editors: Fred Strasser, Mary Romano
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