AT&T Will Fight Justice Department Anti-trust Claim
Faced with a $7 billion cancellation fee and an antitrust case that would derail its expansion plans, AT&T will see the Justice Department in court.
Wednesday's announcement by the government that it would ask a federal court to block the $39 billion merger between AT&T and T-Mobile left "surprised" AT&T executives with few alternatives.
“We intend to vigorously contest this matter in court,” AT&T said in a statement.
The government's antitrust case before a federal judge in Washington, D. C. will have to prove that allowing the merger between the second and fourth largest wireless carriers in the U.S. would result in higher prices and a less competitive market.
AT&T's general counsel, Wayne Watts refuted that charge and pointed out that, although the company met "repeatedly" with government lawyers, there had been "no indication from the DOJ that this action was being contemplated."
After the news broke, Deutsche Telekom (the European parent company of T-Mobile) offered that it too will fight the suit. Between the two companies, AT&T has the most to lose in a failed merger. Should the acquisition be rejected, the company has agreed it will pay a package of $7 billion, including $3 billion in cash, to Deutche Telekom.
“Given the size of the cancellation fee that was negotiated into this agreement, AT&T has the incentive to fight," Andrew Gavil, who teaches antitrust law at Howard University in Washington, told Bloomberg News.
AT&T also said it will ask for an expedited hearing in front of U.S. District Judge Ellen Segal Huvelle. Judge Huvelle has ruled for and against the Justice Department in the past. Analysts told news sources they do not expect for the upcoming trial to be quick.
In its complaint, the DOJ pointed out that a AT&T/T-Mobile merger would have about 132 million connections to mobile wireless devices and more than $72 billion in mobile wireless telecom service revenue.
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