Late Update, 10:12 pm ET Monday, October 24
The government’s case against the $39 billion AT&T/T-Mobile merger took an intriguing detour on Monday when third-party Sprint defended its own, separate lawsuit against AT&T before a judge in Washington, D.C., arguing that if the merger is allowed to go through “it will make it difficult for Sprint to get key inputs like handsets, as well as raise costs for roaming and backhaul,” according to Sprint attorney Steven Sunshine, Bloomberg reported.
AT&T, meanwhile, sought to argue that Sprint’s case should be dismissed entirely. As Ars Technica‘s Timothy B. Lee reported: “AT&T’s motion to dismiss Sprint’s lawsuit focuses on the issue of standing. AT&T argues that antitrust laws are designed to protect consumers, not competitors such as Sprint. ”
Lee also notes that Sprint’s backhaul argument refers to “the wires and cables Sprint leases from competitors, including AT&T, to connect its cell towers with its own network. But AT&T notes that T-Mobile is not a significant player in the backhaul business, and that a combined AT&T-Mobile would therefore have no more market power in the backhaul market than AT&T does right now.”
And right now, the cards aren’t looking good for Sprint.
Although U.S. District Judge Ellen Segal Huvelle declined to give a ruling on whether to permit or deny the case, she took a hard line against the company’s argument. As Dow Jones Newsires reported:
“You don’t stand in the shoes of the consumer or the Department of Justice,” Huvelle told a lawyer for Sprint. She also noted that antitrust law exists to protect competition, not competitors.
Indeed, so far, Sprint has had a tough time convincing Huvelle of its ultimate aim: That its lawsuit against the merger should not only proceed, but that it should be combined with the Justice Department’s. The move would have allowed it to have more potential access to AT&T’s confidential business information that the DOJ will have access to as part of the legal discovery process. On September 21, Judge Huevelle declined to combine the cases.
As Spencer Waller, an antitrust law professor at the University of Loyola, Chicago, told TPM at the time: “It would be to Sprint’s advantage to have the cases be consolidated. As a party to that case, they’d be able to participate in all the hearings, motions and discovery, and have similar rights to government to the handful of states that have sued Sprint. From their point of view cheaper and more expeditious to do it…Sprint is going to have present a very compelling case to persuade [the judge].”
TPM has reached out to Sprint for their response to today’s (non)outcome and will update when we receive it.
The federal antitrust trial concerning the government’s suit to block the merger between AT&T and T-Mobile will begin February 13, 2012.
Late update: Susan Z. Haller, vice president of litigation for Sprint released the following statement to TPM via email:
“Today the Court heard very specific procedural arguments which focused on whether Sprint and C Spire Wireless have standing to file antitrust complaints separate from the Justice Department’s complaint. These arguments were procedural only, and did not address the merits of either the government’s or Sprint’s suits, which AT&T has not challenged at this stage. Under the law, a competitor has standing if it demonstrates there is a plausible case it would be harmed by the proposed transaction’s effect on the market. We believe Sprint passed that test and we await the Court’s ruling.”
As Haller points out, Sprint wasn’t the only one that filed a separate case against the AT&T/T-Mobile merger: Smaller wireless carrier Cellular South, which is being renamed C Spire Wireless, filed its own lawsuit against AT&T on Sept. 19.
