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A resistant DOJ has put AT&T's bid to continue its reconsolidation in jeopardy. The purchase of T-Mobile would have given AT&T a monopoly on GSM 3G and made it the nation's largest carrier, overall.

T-Mobile has hired George Cary (left) an antitrust lawyer who has already beat the Department of Justice in one lawsuit.  (Source: Legal Times)
Meanwhile AT&T and T-Mobile arm their legal arsenal should the decision go to court

"AT&T is the T-1000 of corporations - no matter how many pieces you break it into, it always comes back together." -- Stephen Colbert on the 2007 rebranding of Cingular as AT&T, Inc. (T)

AT&T's purchase of Deutsche Telekom AG's (ETR:DTE) T-Mobile USA would have granted it an almost complete monopoly on GSM phones in the U.S., where 3G technologies like GSM still dominate the majority of customer plans.  Furthermore, the deal would have made AT&T the nation's largest carrier -- with Verizon Communications, Inc. (VZ) the pair would own 80 percent of U.S. cell phone contracts.  

But alas the 
U.S. Department of Justice decided that AT&T's process to resurrect itself was anticompetitive and violated U.S. federal antitrust laws, and thus filed suit to block the deal.  That suit will effectively kill the deal, according to most.

I. AT&T Meets With DOJ

Or will it?

AT&T is reportedly engaging in a round of last minute negotiations with the U.S. Department of Justice to try to cut a deal to save the acquisition.  Wayne State University law professor Stephen Calkins says such a deal could be attractive to the DOJ, stating in a Reuters 
interview, "It is always scary to go off to litigation. I suppose there's a chance that the government could get cold feet."

The company expressed willingness to divest up to 10 percent of T-Mobile's airwaves and customers in order to escape the perception it was building a monopoly.  A source close to the deal told Reuters, "AT&T is pretty determined that they can find a solution, and they are pretty confident."

II. DOJ Doesn't See Eye-to-Eye with AT&T

But the DOJ apparently wants the company to divest at least 25 percent of T-Mobile -- something AT&T doesn't want to do.  Bob Doyle, a former antitrust enforcer now in private practice, says finding an appropriate buyer would be a daunting difficulty even if AT&T consented to the provision.  He states, "Verizon's a no go. Sprint [Nextel Corp. (
S)] may be a no go also."

As the DOJ filed its 22-page lawsuit Wednesday, sources close to AT&T say the company is growing frustrated.  They remark, "That was part of the frustration in that AT&T expected that they would have had much more meaningful discussions and figure out where everyone was, and whether they could close the gap."

Another source said that while AT&T wants to work out a deal, the discrepancy in the divestiture figures is slowing negotiations.  They state, "I don't know if and when a new meeting is scheduled, given yesterday's news."

III. AT&T Arms Itself for a Legal War

AT&T does have some things working in its favor.  

While the DOJ  did successfully block an attempt by Verizon Communications, Inc. (
VZ) subsidiary MCI, Inc. to purchase Sprint Nextel Corp. (S) (at the time Sprint) in the 1999 Clinton-era and EchoStar Communications Corp's (SATS) deal to buy Hughes Electronic Corp's DirecTV in the 2001 Bush-era, it has lost other antitrust fights.

Under the Bush administration, Oracle Corp. (
ORCL) beat the U.S. DOJ in court in 2004 to acquire Peoplesoft, Inc.  And also under the Bush administration's watch the DOJ floundered in a bid to stop SunGard Data System Inc. from buying Comdisco Inc.

T-Mobile and AT&T also have some high-profile legal talent at their disposal.  At AT&T's side is Richard Rosen of Arnold & Porter LLP, a former communications sector head of the DOJ's antitrust division.  Mr. Rosen oversaw Cingular's purchase of AT&T Wireless and later purchases of Dobson Communications, Centennial Communications, and wireless properties divested by Verizon and Alltel.

In T-Mobile's corner is George Cary of Cleary Gottlieb Steen & Hamilton LLP, who successfully defeated the DOJ in allowing Staples, Inc. (
SPLS) and Office Depot, Inc. (ODP) to merge.  States one antitrust veteran, "He's one of the best. He's exceptional. George Cary is the Lou Gehrig of antitrust."

Also working in AT&T's favor is U.S. District Judge Ellen Segal Huvelle, the presiding judge in the case, has a reputation for speedy rulings.  The trial could occur within two months, according to sources.  And while Judge Huvelle has previously admonished the pair for providing lacking information to support their claims, they will soon get enough chance to try to improve their fortunes.

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Gee, that's funny..
By kodekov on 9/2/2011 1:47:16 PM , Rating: 1
Under the Bush administration, Oracle Corp. (ORCL) beat the U.S. DOJ in court in 2004 to acquire Peoplesoft, Inc. And also under the Bush administration's watch the DOJ floundered in a bid to stop SunGard Data System Inc. from buying Comdisco Inc.

What a coincidence.. bush era and big corporations continuing to fuck anti trust laws in the ass.

RE: Gee, that's funny..
By JasonMick on 9/2/2011 2:02:59 PM , Rating: 5
What a coincidence.. bush era and big corporations continuing to fuck anti trust laws in the ass.

Actually the Bush admin ostensibly tried to block those mergers.

They took those companies to court and sued. In the Peoplesoft case their suit was thrown out by a federal judge and in the Sungard case they won an appeals court decision:

To blame those losses on Bush, when his appointees fought hard to stop them, seems a bit unfair...

RE: Gee, that's funny..
By FITCamaro on 9/2/11, Rating: 0
RE: Gee, that's funny..
By aharris02 on 9/2/2011 2:21:34 PM , Rating: 3
I can get over the economy. I can even look past Katrina, Cheney, and Iraq.

But Jersey Shore??

What the hell was Bush thinking?

RE: Gee, that's funny..
By nolisi on 9/2/2011 2:49:43 PM , Rating: 4
Bush had an opportunity to stop Jersey Shore at its birth. All it would have taken was a single airstrike; unlike bin Laden, we knew where these smelly pr*cks were the whole time. Instead we spent meaningless time waterboarding people and poking around Afghanistan. Shows what a complete failure he was.

RE: Gee, that's funny..
By Samus on 9/2/2011 3:18:38 PM , Rating: 2
I am about as liberal as they come, and can still support the Bush Administration's fight against Sungard to aquire Comdisco, a case I paid great attention too. I used to work for Comdisco.

RE: Gee, that's funny..
By nocturne_81 on 9/3/2011 7:38:23 PM , Rating: 2
Actually the Bush admin ostensibly tried to block those mergers.

Keep in mind that the entire executive branch of our government doesn't change every time a new president takes power (there are protections in our constitution to prevent such). You have a few politicians on the top, but the work is invariably maintained by the 'lifers' -- a fact which is especially true of the DOJ.

Double whammy...
By StealthX32 on 9/2/2011 11:54:46 AM , Rating: 5
Thanks for using our tax dollars to bend us over and f*** us over harder, AT&T.

Cut a deal?
By peebee on 9/2/2011 2:20:08 PM , Rating: 2
AT&T is reportedly engaging in a round of last minute negotiations with the U.S. Department of Justice to try to cut a deal to save the acquisition.

It's either LEGAL or ILLEGAL. There is no negotiating with laws. If the DOJ has a change of heart then it will be obvious that someone was paid off. How about the next time I'm pulled over I cut a deal with the officer to mow his/her lawn and forego the ticket.

RE: Cut a deal?
By tekzor on 9/2/2011 5:29:32 PM , Rating: 2
you guys are missing the point.
DOJ didn't get its cut from so now its throwing a tantrum.

Maybe this is a good thing...
By NicodemusMM on 9/2/2011 12:32:31 PM , Rating: 2
Let AT&T assimilate T-Mobile now, then Verizon, Sprint and numerous smaller carriers can file antitrust lawsuits giving the DoJ the opportunity to split it back up into multiple smaller pieces. Maybe a few pieces around the size of Sprint getting some competition back in the market.

Or am I just being too optimistic that the consumer isn't ultimately going to get screwed either way?

~ Nicodemus

By theArchMichael on 9/2/2011 12:55:44 PM , Rating: 2
because AT&T won't go down easy like the androids in Terminator 2, but...
perhaps you would consider the borg, it's got the "resistance is futile" thing along with the assimilation aspect going for it.

By DWwolf on 9/2/2011 3:14:23 PM , Rating: 2
As per the previous articles on the merger, 3 Billion$ would have bought a roughly equivalent amount of network expansion as taking over T-mobile would have gained em......where does the other 30+ Billion $ go to ?
The shareholders should raise hell... It smells very fishy

By Targon on 9/5/2011 6:01:41 AM , Rating: 2
In the USA, you have had only AT&T and T-mobile as the real choices for GSM. Now, if T-mobile is indeed at their end(meaning the company will be gone no matter what in another 3-5 years), you can't say that the AT&T merger is anti-competitive. Sprint doesn't have the money for it, so who else would buy T-mobile?

Now, AT&T is also not doing anything WRONG by purchasing it illegal to buy a company that is looking to end operations? If not, then how is it anti-competitive? GSM monopoly? AT&T and T-mobile already use different 3G frequencies, so even though devices from either carrier can work with the other, it is at 2G speeds, and no one buys a phone to operate at 2G speeds these days.

Verizon is the largest carrier in the USA, so the DoJ doesn't like the idea that AT&T would want to change that through a perfectly legal buyout? The DoJ needs to focus on true illegal activity, and get away from looking like a bunch of idiots who need to get involved where they have no business going. If there were unfair methods used to pressure T-mobile into merging, THAT would be something to look into, but other than that, the DoJ is wasting taxpayer money here. What is illegal about this merger? Not a damn thing, except that people on T-mobile will end up paying more for service(due to the cost of a LARGE national network being higher than the tiny footprint that T-mobile has).

Too Big to Fail?
By sorry dog on 9/2/2011 12:47:14 PM , Rating: 1
With a few billion to be lost if forced to walk away you can bet AT&T ain't gonna stop kicking and screaming anytime soon until they have some kind of deal.

This is way way bigger than deals mentioned in the article where the DOJ failed...and because it is so high profile it is going to be a clusterfock due all parties involved (from the president down to lowly Sprint) having to save public face while not getting screwed in the back.

...I'm a happy T-mobile customer so I hope deal gets killed, but at the very least I look forward to entertainment this circus show is sure to provide.

"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins

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