(Source: BGR)
Company is stubbornly refusing to back down despite top lawyers saying it has little chance at winning

As Don Schlitz famously wrote:
You got to know when to hold 'em, know when to fold 'em,
Know when to walk away, know when to run.
You never count your money when you're sittin' at the table,
There'll be time enough for countin' when the dealin's done.
In the wake of the U.S. Department of Justice's landmark decision to halt the resurrection of the American Telephone and Telegraph empire, by blocking AT&T, Inc. (T) from swallowing Deutsche Telekom AG's (ETR:DTE) T-Mobile USA, many say the war is lost for AT&T.

I. Legal Experts Say AT&T's Making Matters Worse for Itself

Howard University law professor Andy Gavil, an expert witness who testified before Congress about the deal, states to Reuters, "Having read the complaint, I don't see a basis for a negotiated settlement."

AT&T is refusing to back down and has challenged the DOJ to try to stop the merger in court.  The company is expected to make an "efficiency" oriented defense of the deal, promoting the improved price, quality, research, and potentially jobs that the deal would bring.

But on the price front, AT&T's contractors are already significantly higher priced that T-Mobile's and court filings reveal that job growth would slow from the deal rather than speed up, as T-Mobile would reduce its hiring rate from current projections.

Furthermore, the strategy of defending a potentially anticompetitive merger on the grounds of improved efficiencies is a legally weak one, says University of Baltimore law school professor Robert Lande.  He states, "Very few efficiency defenses work. They make promises that these efficiencies could happen, but showing that in court is very difficult."

Two veteran Washington antitrust attorneys who spoke to Reuters, but declined to be named because of their firms involvement in the pending case said the situation was looking bleak for AT&T.  They say it will likely either lose in court or be forced to walk away from the merger.

II. A Compulsive Gamble?

It's easy to see why AT&T wouldn't want to walk away (or run away, perhaps) from the deal -- if the merger falls through AT&T still owes T-Mobile $3B USD in cash, $2B USD in spectrum, and $1B in roaming coverage.  However, the question becomes whether AT&T is gambling with its financial fortunes, and how long Deutsche Telekom will be willing to wait for a sale.

Whoever loses the case would likely appeal, which could stretch the court decision out over a long period.  AT&T has filed for an expedited case, but there's no guarantees its request will be accepted.

States Maury Mechanick, a telecommunications attorney at law firm White & Case, "You could have a situation here where the combined litigation and regulatory process could extend for several months or years. From a business practicality perspective, is that a delay that AT&T and T-Mobile can tolerate? That's ultimately a judgment that they will have to make."

In that regard the nightmare for AT&T may have just begun.  The verdict seems relatively unanimous -- AT&T is making a relatively bad situation worse by refusing to swallow its pride and cut its losses.

Of course some think AT&T is merely playing a game of chicken and will sagely back down at the last minute.

David Smutny, an antitrust lawyer with Orrick, Herrington & Sutcliffe offers, "A preliminary question is whether AT&T will go to court. It's certainly not uncommon for companies to look at this and decide that the game isn't worth the gamble."

III.  Judge Appointed in Case Blocked Another Past Merger During Bush Era
The case "USA v. AT&T Inc et al, U.S. District Court for the District of Columbia, No. 11-cv-1560" will likely be a circus show -- should AT&T persist in its bid to push the merger -- according to experts.  They predict that both sides will bring in workers, consumers, economists, expert witnesses, competitors, and/or state regulators.

Professor Lande says the case is an important business decision for the Obama administration, commenting, "This will be the Obama administration's line in the sand. This will be their signature antitrust event."

But lest one associate the action with the Democratic party, legal experts point out that of the two other major telecommunications actions to prevent mergers in recent years, one was brought by the Republican President George W. Bush's Justice Department, while the other was brought by Democratic President Bill Clinton's DOJ.

The 1999 Clinton-era case saw an attempt by Verizon Communications, Inc. (VZ) subsidiary MCI, Inc. to purchase Sprint Nextel Corp. (S) (at the time Sprint) blocked.  The 2001 Bush-era case saw EchoStar Communications Corp's (SATS) deal to buy Hughes Electronic Corp's DirecTV was blocked (though in 2011 EchoStar did buy part of Hughes Electronics, sans the DirectTV holdings, under the Obama administration's watch).

The AT&T deal has detractors on both sides of the political aisle.  It also has both Democratic and Republican supporters in the House and Senate -- primarily federal politicians whose campaigns it donated to.

The 2001 Echostar case's judge, U.S. District Judge Ellen Segal Huvelle, will preside over the new case.  If her early statements are any indication, that's bad news for AT&T -- she already blasted AT&T and T-Mobile for a "sluggish" response to the government request for information.

As we said, for AT&T, the nightmare be just beginning.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken

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