When I first heard the U.S. Department of Justice had blocked the AT&T, T-Mobile merger, I was shocked. Not because the proposed combination didn't deserve extreme scrutiny given both AT&T's history and the large number of wireless customers who would be affected, but because regulators didn't give the company conditions under which the merger might have been approved.
In the years that I've been writing this blog, I don't know that I've seen an outright acquisition denial on antitrust grounds. Even the Google DoubleClick deal was approved with conditions. But the DoJ indicated that blocking the merger was the only way to preserve a "vibrant and competitive marketplace." At the time, AT&T promised to seek review of the decision.
Now, as IT Business Edge blogger Carl Weinschenk pointed out, the parties have resorted to the courts to sort out the mess. Sprint, the number three wireless provider in the U.S., is joining the DoJ in seeking to block the merger.
In a move that was suprising to some, Verizon CEO Lowell McAdams spoke in favor of the merger and criticized U.S. regulators for "regulat[ing] the industry without actually passing regulations," according to Slash Gear. For McAdams, the merger is more about making the best use of spectrum than it is an attempt to monopolize the market. He said the government will have to be more aggressive with its wireless spectrum plans if it continues to block the merger.
Several House Republicans also spoke in favor of the merger, The Wall Street Journal reports. In a letter to President Obama, Rep. Pete Olsen (R-Texas) and his colleagues claimed blocking the AT&T, T-Mobile combination would "thwart job creation and economic growth."
How will the court come down? That remains to be seen. But in the event the merger is blocked completely, AT&T will be out around $3 billion in damages it must pay to T-Mobile.