Business

AT&T tries to make sense of DOJ complaint, while others say the company should have seen it coming

Amanda Carey and Tina Nguyen
Contributor

The Department of Justice filed suit Wednesday to block the proposed merger between wireless carriers AT&T and T-Mobile, but no one knows if the move is effectively the end of the road for the $39 billion deal, or just a roadblock.

The masterminds at AT&T are just as confused — shocked, even.

According to two sources familiar with the matter, on Tuesday — the day before the complaint — AT&T representatives and DOJ attorneys had a meeting in which they discussed the wireless company’s proposal for its divestitures.

Both sources told TheDC that there was absolutely no hint or indication given by the DOJ during the meeting that they would file suit to block the merger the next day.

“‘Curious’ is the only word, I can frankly use,” a source told The Daily Caller.

Antitrust advocates, however, say AT&T should have seen it coming. (RELATED: DOJ sues to stop giant telecom merger)

Regardless, in the wake of the DOJ’s announcement, two theories have emerged that attempt to make sense of the complaint.

The first school of thought is that the DOJ expedited its decision because it was feeling boxed in politically.

“We were talking about setting up another meeting,” a source familiar with the merger said. “Not once did they say, ‘Don’t worry about it because we’re going to block it tomorrow!’”

“When we got the media advisory, we thought ‘This can’t be us … who else could it be?’” said the other source.

On Wednesday AT&T announced that even with the merger, the company would retain up to 35,000 jobs — a fact that was sure to become a major talking point for those pushing consolidation of the two companies.

At that point, the theory goes, folks at the DOJ decided to file a complaint before the “mounting political pressure was too insurmountable for them,” the source speculated.

Another source familiar with the merger proceedings put the speculation another way, telling TheDC that the “jobs announcement yesterday caused them [DOJ] to move [more quickly] than they had intended.”

The second theory is drawn from one ambiguous comment Wednesday from acting U.S. Assistant Attorney General Sharis A. Pozen seemed to leave the door open for further discussion on the merger.

During a Q&A session, Pozen said of AT&T, “If they want to resolve those concerns, we can certainly do that. Here we filed a lawsuit and we’ll proceed in court. We’ll see what happens next.”

This alternative theory also holds that the complaint was more about flexing muscle for the progressive left than anything else.

After the Obama administration allowed the recent Comcast/NBC merger to go through, progressives and strong antitrust advocates have accused the administration of being soft on antitrust issues.

If this is the case, then the complaint is just a roadblock designed to get even more concessions from AT&T than the DOJ would have otherwise, before ultimately letting the merger go through.

For its part, AT&T plans to file, in court, a request for an expedited review process.

On the other hand, antitrust experts believe that the Department of Justice has a strong case based on established case law, and that AT&T did not justify the merger properly.

In this case, AT&T needed to prove that the merger was a necessary business move to achieve goals that they could not have accomplished without T-Mobile—in this case, the acquisition of spectrum, technologies, and new markets.  The DOJ’s ruling suggested that AT&T had done a poor job defending its proposal, particularly since T-Mobile was already a competitive leader in the wireless market.