The title for this blog post should actually be a little longer.
It should read: "The People of the United States of America, the State of New York, the State of Washington, the State of California, the State of Illinois, the Commonwealth of Massachusetts, the State of Ohio and the Commonwealth of Pennsylvania vs. AT&T, T-Mobile and Deutsche Telekom."
That's too much of a handful.
Of course, with yesterday's news that a bi-partisan group of seven state attorneys general have joined the Justice Department's lawsuit to block AT&T's takeover of T-Mobile, that's exactly what AT&T has -- a handful. In this case, it's a handful of legal obstacles to overcome.
When the news was announced yesterday by the Justice Department and in news releases from the various state attorneys general, AT&T still held out hope for settlement with DOJ and waved off the significance of the new suits filed by the states. Instead, AT&T pointed to a July letter signed by 11 other state Attorneys General who support the proposed transaction.
What AT&T isn't telling media is that not one of these attorneys general had conducted a legal investigation into the transaction before signing AT&T's letter endorsing the T-Mobile takeover. They just issued a statement of political support -- they weren't offering a legal opinion.
In July, when AT&T released this political letter of support, the Attorney General of Louisiana declined to sign the pro-AT&T letter, telling the Attorney Generals of Arkansas and Utah the following:
"We believe such action is premature at this time. We are carefully reviewing, inter alia, information gathered from other states and monitoring regulatory developments at the federal and state levels, particularly in the area of economic models used in the merger proposal. We believe such review and analysis is essential for a thorough analysis of the potential impact of the proposed merger on Louisiana consumers, businesses, price, competition and market conditions. We also need to carefully consider our regulatory role as well as legal and professional obligations under law and the rules of professional conduct, to avoid any potential conflict in our representation of the state and its various agencies and officials."
In other words, the Louisiana Attorney General declined to sign the pro-AT&T letter because the analysis of the proposed transaction was ongoing -- at this point in time, neither the Justice Department nor the states had filed suit.
But wait a minute, I can hear AT&T saying, Louisiana didn't file suit. In fact, 42 other state attorneys general didn't file suit.
That's true.
But the letter endorsing the transaction that AT&T is still touting today is one that was signed before any law enforcement investigation was completed.
And frankly, even if a state attorney general were to announce tomorrow that he or she had completed an investigation and had concluded that the transaction was competitive and wouldn't harm consumers, seven other state attorneys general disagreed and have filed suit in Federal Court. (Also, it's important to keep in mind that at least one state is supportive of the DOJ lawsuit, but it doesn't have the resources to join the fight. I imagine, given the tough budgets most states are facing, that more AGs are in this situation.)
In any case, the bottom line is now, AT&T has to contend with the U.S. Justice Department, seven states and Sprint.
Even if the DOJ were to agree to a settlement with AT&T, AT&T would still have to convince seven states and Sprint to settle. In evaluating any future settlement offer from AT&T, under antitrust guidelines, the DOJ must determine that the competition T-Mobile currently brings to the marketplace would be replaced by whatever offer AT&T makes.
In other words, if T-Mobile is going to be swallowed up by AT&T, AT&T must offer a new fourth national wireless carrier to take its place. Such a carrier must have the market power that T-Mobile has today. Does anyone seriously believe that's likely?
And speaking of Sprint, last night Sprint filed motions in Federal Court which request that Sprint's case against AT&T be considered in a coordinated proceeding with the Department of Justice's suit. The judge will consider Sprint's motions in her Sept. 21 hearing.
Despite media reports indicating that the scheduling hearing involves only the DOJ and AT&T, Sprint will be in court that day, too. (And Sprint's view of when a trial should be held differs from AT&T -- we agreed with the DOJ's proposed schedule.)
It should be an interesting day.
So what about the politics here? What will AT&T do next? I fully expect AT&T, given its vast network of political support of elected officials, to continue to announce more officials backing the proposed transaction. In almost every case, these officials are ones that have received thousands of dollars of AT&T, CWA and IBEW campaign cash over the years, so I largely discount that. Media should, too.
The fact is, it doesn't matter what political pressure AT&T applies. This matter is now in court and if AT&T thinks that the Justice Department, seven state Attorneys General and a U.S. District Court Judge will react to its political tactics, it's sadly mistaken and frankly extremely cynical.
In my personal view, this transaction is unlawful and must be stopped -- for the sake of consumers, for competition, for American jobs and for our country's economy.
And speaking of my personal views, this blog represents that -- my personal view not that of my employer. To learn more, please review my disclosures here.
