AT&T suffered a minor blow it its defense against two antitrust lawsuits filed by competitors Sprint and C Spire Wireless when a federal judge on Wednesday ruled that those cases – filed to stop AT&T’s planned $39 billion merger with T-Mobile – should be allowed to proceed.
AT&T had attempted to argue that Sprint’s and C Spire’s claims should be thrown out because antitrust laws are chiefly in place for the protection of consumers, not competing companies.
But Judge Ellen Segal Huvelle of the U.S. District Court of the District of Columbia specifically said in the ruling, conducive with precedent, that Sprint and C Spire Wireless do have a right to sue so long as some of their claims to possible injury caused by the proposed merger are valid.
“Where private plaintiffs have successfully pleaded antitrust injury, the fact that they are
defendants’ competitors is no bar,” Huvelle’s ruling reads.
“We are pleased that the court has given us the chance to continue fighting to preserve competition on behalf of consumers and the wireless industry,” said Susan Z. Haller, vice president of litigation at Sprint, in a statement emailed to TPM.
AT&T, for its part, downplayed the fact that its request to dismiss the lawsuits entirely wasn’t granted, pointing out that Huvelle actually dismissed a host of specific claims filed by Sprint and C Spire Wireless relating to nuanced, alleged negative effects the merger would have on their businesses and the wireless industry writ large.
“Sprint can spin this however they’d like, but anytime a judge dismisses nearly all your claims, it’s hardly a good day in court,” said Jim Cicconi, AT&T’s senior executive VP for external and legislative affairs.
Spencer Waller, a professor of antitrust law at Loyola University Chicago unconnected to the case, agreed with AT&T that the ruling didn’t change much in its defense of the merger.
“I see this as a modestly positive development for the plaintiffs, as it increases strength and resources on their part, but it doesn’t change basic game plan of AT&T, or anyone, for that matter, going forward,” Waller told TPM in an interview by telephone.
That’s a distinctly different assessment from law professor Andrew Gavil at Howard University in Washington, who told Bloomberg Businessweek that the victory was “important” for the plaintiffs.
However, Waller noted that whatever other legal experts made of the decision, one thing was clear: The odds that AT&T and its complainants would reach some sort of settlement are basically nonexistent now, and all are gearing up for a protracted legal battle.
“The law is easy, the law is clear,” Waller told TPM, “the facts aren’t. But those will come out in court.”
The three parties are now due back in court on December 9 for a an initial scheduling hearing that will decide exactly when the court cases are to begin and how the evidentiary discovery process will be handled.
Earlier in September, Sprint had sought a coordinated discovery, allowing for them to conduct depositions in the same sessions as the Justice Department and C Spire Wireless and have access to the same evidence that the Justice Department had taken from other competitors in the wireless market, a testy subject since that information could contain trade secrets and confidential business plans.
The December 9 hearing will lay out exactly whether or not Sprint and C Spire Wireless will be granted their requests for a combined discovery process.
The Sprint lawsuit, filed on September 6, came on the heels of the Justice Department’s own, separate antitrust lawsuit against AT&T over the merger, which was filed on the last day of August.
On September 16, seven states attorneys general (New York, California, Illinois, Ohio, Pennsylvania, Massachusetts and Washington) filed to join Justice’s case against AT&T. C Spire Wireless, formerly called Cellular South (the name it is still referred to in court documents), filed its own suit against AT&T on September 19.
The Sprint and C Spire cases are similar in that they both allege the merger will drive up costs for “procuring necessary inputs,” as Huvelle put it, namely, backhaul (the connection between one tower and the overall wireless network) and roaming. Huvelle said that the mobile roaming claims in particular were worthy of consideration by the court, considering that C Spire currently only has two roaming wireless providers to choose from, T-Mobile and AT&T, which would obviously become one if the merger were allowed to proceed, and the nation’s largest wireless carrier by number of subscribers at that, eclipsing current largest carrier Verizon. Currently, AT&T is the nation’s second largest wireless carrier and T-Mobile is the nation’s fourth largest.
Meanwhile, AT&T’s merger is currently under investigation by the California Utilities Commission, at Sprint’s behest, and is undergoing standard review for approval by the Federal Communications Commission. The FCC is on day 152 of a self-imposed timeline to deliver a decision within 180 days of the initial merger filing request, due in early December. But the FCC has already stopped the shot clock once to request more information from AT&T and there’s no reason why it couldn’t do so again.
The FCC can’t legally sue to block the merger or rule against it per se, but it can claim that the merger isn’t in the public interest and prevent AT&T and T-Mobile from transferring (i.e. combining) wireless spectrum licenses, as CNET reported earlier. As that’s the whole point of the merger, if the FCC decides to reject the request, then AT&T and T-Mobile (or more specifically, T-Mobile’s German corporate parent Deutsche Telekom) wouldn’t go ahead and combine after all.
Waller told TPM that the Judge Huvelle’s decision to allow the Sprint and C Spire cases to proceed wouldn’t have any impact on the other AT&T cases and reviews.
But if the FCC declines to approve the merger or Judge Huvelle rules against it, AT&T would have to pay Deutsche Telekom, T-Mobile’s parent, $6 billion in breakup fees. The cost of the merger to AT&T were it to go through is $39 billion.
