FCC Chairman Julius Genachowski circulated a draft order to other FCC commissioners seeking an administrative law hearing on AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA.
Although it does not constitute an official decision, the draft order is potentially another setback for the deal, which the Department of Justice has sued to block on antitrust grounds. FCC officials told reporters in a briefing that there is currently no timeline for the FCC commissioners to make a decision. The FCC can now either approve the deal as proposed, approve it with conditions or send it to the administrative law judge. If the FCC does decide to hold a hearing, it will take place after the conclusion to the Justice Department's litigation; a trial in that case is expected to begin Feb. 13.
In the FCC administrative law hearing, evidence would be presented as in a trial, witnesses would be called and companies either opposed to or in support of the deal would likely be heard.
"The FCC's action today is disappointing," Larry Solomon, AT&T's senior vice president of corporate communications, said in a statement. "It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the U.S. economy desperately needs both. At this time, we are reviewing all options."
FCC officials said that after weighing the evidence that the deal was not in the public interest, the commission's staff decided that there were substantial questions of fact that needed to be resolved. By law, under the Communications Act, if either one of those standards is met in a review of a proposed transaction, the FCC must refer the deal to an administrative law judge.
The FCC found that the deal would lead to "unprecedented concentration" in the wireless market, an FCC official said. Additionally, the FCC staff decided that some of the claimed benefits of the deal were not supported by the record. Chief among them, an FCC official said, was AT&T's claim that it needs T-Mobile to cover 97 percent of all Americans with LTE. The claim that the deal will lead to job increases was also not supported by the record, according to the FCC, which concluded that the deal will instead lead to "massive" job cuts.
Separately, Genachowski circulated an order approving AT&T's proposed acquisition of Qualcomm's (NASDAQ:QCOM) 700 MHz MediaFLO spectrum, with conditions, which the FCC officials declined to discuss. The FCC officials also did not indicate whether the Qualcomm deal conditions are tied to the outcome of the AT&T/T-Mobile deal.
- see this WSJ article (sub. req.)
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