It’s official: Lawyers for AT&T and the Justice Department will lock horns in the courtroom beginning February 13, 2012, as the company tries to fend off the DOJ’s claims that its proposed $39 billion merger with T-Mobile violates U.S. antitrust law. But Sprint won’t be joining them, at least not yet.
That’s the word from U.S. District Judge Ellen Segal Huvelle, who on Wednesday ruled in a preliminary scheduling hearing that AT&T and the DOJ would have six weeks to prepare for the non-jury trial.
The ruling was pretty much an even compromise between the DOJ”s request for the trial to start on March 19 and AT&T’s for an earlier kickoff on Jan. 16.
“AT&T doesn’t want to drag this out,” said Daniel Crane, a professor of antitrust law at the University of Michigan, in a telephone interview with Idea Lab. “The longer duration of the trial, the more it is on the government’s side, as it will have more time to amass evidence from competitors against the merger.”
But one of those competitors in particular is a wild card in the proceedings: Sprint, which itself filed suit to block the merger on September 6, asked the judge to combine its case with the Justice Department’s, as they are materially similar.
In a win for AT&T and a setback for Sprint, Judge Huevelle declined to consolidate the cases and set an October 24 date to consider AT&T’s request to dismiss the Sprint lawsuit, although she said she would still consider Sprint’s request. AT&T’s lawyer Mark Hasnen argued that Sprint was just trying to consolidate as a tactic to slow down the litigation.
Sprint released the following statement in response to the news: “We are pleased that Judge Huvelle decided to move both cases very quickly and in an expedited manner. Although the judge did not consolidate Sprint’s case with the government’s case at this time, we are pleased that the judge will hear from Sprint on the merits in oral arguments on October 24.”
“I can imagine why Sprint would want to consolidate,” said Spencer Waller, professor and director of the consumer antitrust studies program at Loyola University in a phone call with IDea Lab. “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.”
But as Waller explained, the judge will likely be heavily influenced by the DOJ’s position: If DOJ doesn’t want the cases joined because it believes that would unnecessarily complicate its case, then the judge will likely decline to consolidate.
“Sprint is going to have present a very compelling case to persuade her,” Waller added.
A core issue at stake for Sprint and Cellular South, the nation’s ninth-largest mobile carrier, which yesterday also sued to block the merger, is the case’s discovery process, in which the DOJ and AT&T will be allowed to subpoena any American wireless company for evidence that supports their respective cases.
That evidence, though is inevitably going to be inextricably tied to the companies’ business strategies and will likely be confidential and proprietary, making it difficult for Judge Huevelle to balance the participants’ legal rights to access the discovery and the companies’ rights to protect trade secrets.
As a result, Waller said, no matter how she rules, there will likely be strict protective orders enforced in all of the cases prohibiting all but a few lawyers from seeing the discovery. Still, the judge has to give a reason to decline Sprint’s request to consolidate and even then, the company can still appeal.
The DOJ case will decide the fate of America’s largest proposed telecommunications merger – which would join the AT&T Mobility, the nation’s second largest mobile network by subscribers, with T-Mobile USA, the nation’s fourth largest and the subsidiary of German company Deutsche Telekom, to create the largest such company in the nation, overtaking number two provider USA
Critics, including Sprint, the nation’s third largest carrier, and several lawmakers and advocacy groups, say the merger would create an unfair barrier to competition in the mobile wireless market. That’s also the essence of the Justice Department’s suit against the merger, which was filed on Aug. 31.
On Friday, seven state’s attorneys joined the DOJ’s lawsuit as well. In response, AT&T pointed out that 11 state’s attorneys have voiced support of the merger.
Correction: This post originally mistakenly reported the date of the trial as 2011 instead of 2012. It has since been corrected. We regret the error.
