The Department of Justice indicated at a hearing that it will try to postpone its legal case against AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA, potentially dealing a damaging blow to the deal's prospects.
At a hearing before U.S. District Judge Ellen Huvelle, the Justice Department argued that because AT&T had withdrawn its application for the deal from the FCC, expedited proceedings were no longer needed. If the trial for the antitrust case, now scheduled to begin Feb. 13, is delayed it could potentially be fatal to the deal, since AT&T and T-Mobile parent Deutsche Telekom need to consummate the deal by September.
If the deal does not receive regulatory approval by then, AT&T will be forced to pay Deutsche Telekom $6 billion in breakup feeds, including $3 billion in cash and $3 billion worth of spectrum and roaming agreements. AT&T and Deutsche Telekom have argued that a swift trial is needed for the deal to survive.
Judge Huvelle did not issue a ruling on the Justice Department's request to postpone the trial, but asked the Justice Department to file its motion by Tuesday and set another hearing for Thursday. However, during arguments at the hearing, she seemed to lean toward the government's position.
AT&T had hoped to win the DOJ case and then re-apply to the FCC.
Huvelle criticized AT&T and T-Mobile for withdrawing their FCC application. The companies said they did so to focus on the DOJ case, though analysts said part of the reason was to keep the FCC from releasing a report critical of the deal--which the FCC did anyway. "At this moment, [the DOJ] does not think you are a serious opponent without an application at the FCC," she said. "Don't you understand that this 'strategy' has a slight aura of using the court?" She also said the companies could change the structure of the deal as it stands now and then re-apply with that to the FCC. "You could change the deal in a month and everybody's time will be wasted," she said.
"We are anxious to bring to the American consumer the benefits of increased wireless network capacity and efficiencies that can only arise from combining the resources of AT&T and T-Mobile USA," Wayne Watts, AT&T's general counsel, said in a statement. "We are eager to present our case in court."
- see this WSJ article (sub. req.)
- see this Reuters article
- see this separate Reuters article
- see this Washington Post article
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