A federal judge allowed Sprint Nextel (NYSE:S) and C Spire Wireless to continue parts of their lawsuit to block AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA. While U.S. District Judge Ellen Huvelle threw out many of the claims Sprint and C Spire, formerly Cellular South, made in their filings, she ruled that the two could continue to pursue claims that the deal will harm the mobile device marketplace.
The main ruling in favor of Sprint and C Spire focused on the two companies' claims that post-merger, AT&T and Verizon Wireless (NYSE:VZ) would command too much control over the mobile device market due to their size. "Mobile wireless devices, and smartphones in particular, are Sprint's and Cellular South's first-run movies," Huvelle wrote.
Judge Huvelle, who is also overseeing the Department of Justice's antitrust case against the deal, also upheld C Spire's claims that the deal would negatively impact its GSM roaming abilities. (C Spire does not have many GSM customers and is primarily a CDMA carrier.)
However, she dismissed Sprint's claim that the elimination of one of four national competitors in the wireless market would lead to potential "marginaliz[ation]" of Sprint as well as the two companies' claim that that the merger would lead to possible price increases to consumers or coordination among competitors, among several other claims.
Despite the dismissal of many of the claims brought by Sprint and C Spire, Huvelle's 44-page ruling was a partial victory for the carriers, since AT&T had filed a motion last month seeking to block their lawsuits outright. Now AT&T will have to not only prepare for a trial with the Justice Department, set to begin Feb. 13, but will also have to contend with the lawsuits from Sprint and C Spire.
"Where private plaintiffs have successfully pleaded antitrust injury, the fact that they are defendants' competitors is no bar" to pursuing their claims, Huvelle wrote.
"We are pleased with the ruling that dismisses the vast majority of the claims of Sprint and CellSouth," Wayne Watts, AT&T's general counsel, said in a statement. "We believe the limited, minor claims they have left are entirely without merit." Sprint and C Spire praised the judge's ruling. Huvelle set a Dec. 9 hearing to discuss the Sprint and C Spire cases against AT&T.
The ruling on Wednesday did not affect the government's case against AT&T, and the government declined to comment on Wednesday. AT&T has said it is both preparing for trial and looking for ways to assuage to the Justice Department's antitrust concerns.
- see Huvelle's ruling (PDF)
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
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