AT&T Hopes to Settle with DoJ Before Going to Court

Chris CrumBusiness

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On Wednesday, the U.S. Justice Department announced that it had filed an antitrust lawsuit to block AT&T's proposed acquisition of T-Mobile USA. “The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Deputy Attorney General James M. Cole.

AT&T, is gearing up to present a two-pronged solution to the DoJ, with the hopes of getting the acquisition passed, according to a report from Reuters, citing "people close to the matter". This would reportedly let AT&T try to find a settlement before the suit actually reaches the courtroom.

AT&T said the following in a statement on Wednesday:

We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.

We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.

At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will:

  • Help solve our nation’s spectrum exhaust situation and improve wireless service for millions.
  • Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population;
  • Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.

We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.

Sprint released the following statement on that day: “The DOJ today delivered a decisive victory for consumers, competition and our country. By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers’ interests first. Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision – one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry. Contrary to AT&T’s assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”

Now, Sprint has put out a study aimed at debunking AT&T's claims about increasing jobs. Summaries of the conclusions it draws are as follows:

  • The EPI analysis claiming that the AT&T/T-Mobile merger will create jobs because of increased capital investment is completely unfounded. It is based solely on a claim by AT&T that it will increase its capital expenditures. But it appears to ignore reductions in capital expenditures that T-Mobile would have undertaken, and the strong likelihood that net capital expenditures would decline as a result of the merger. Indeed AT&T has told the federal government and its investors that the merger would lead to reduced capital expenditures. By EPI’s own logic, the net reduction in capital expenditures would lead to
    fewer jobs.
  • The past record of employment changes following AT&T acquisitions of other mobile carriers indicates that these acquisitions led to reductions in employment among the workforces of AT&T and the acquired company.
  • AT&T itself acknowledges that the merger will entail force reductions. Given the first two conclusions, there is no reason not to take them at their word.
  • The AT&T/T-Mobile merger offers more jobs for the CWA, and probably higher wages for those CWA members employed by the post-merger AT&T who do not lose their jobs as a result of the merger. Overall, though, it will almost surely act to directly reduce jobs for American workers

You can see the whole thing here (pdf).

Chris Crum
Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.