AT&T Inc will ask a federal judge to throw out Sprint Nextel Corp’s lawsuit to stop its purchase of T-Mobile USA Inc, seeking a decision that would curb Sprint’s ability to help the US block the deal.
AT&T will argue at a hearing today in Washington that Sprint, as a competitor rather than a consumer, has no right under antitrust law to bring the suit and that Sprint’s claims the $39 billion deal would hurt its business are unfounded.
Should AT&T persuade US District Judge Ellen Segal Huvelleto dismiss the case, Sprint’s advice on the Justice Department’s suit would be limited by its restricted access to confidential AT&T information, said Thomas Horton, a law professor at the University of South Dakota Law School and former antitrust attorney in the department.
“It will expedite the government’s case to have Sprint as an official ally,” said Horton, who spent about eight years in the antitrust division.
Sprint told Huvelle on October 12 that to prepare its case it needed access to confidential data the Justice Department collected from AT&T during the US probe of the proposed T-Mobile merger. The company said it suffered from “fundamental unfairness” because, as a competitor with relevant information, AT&T is allowed to subpoena Sprint documents in the government’s antitrust case.
Huvelle, overseeing all the AT&T cases, froze the document exchanges while she weighs the motion to dismiss.
The Justice Department said in court papers that its case would be helped by Sprint’s access to the material. Sprint has the “technological and business” expertise to analyse the arguments and evidence presented by Dallas-based AT&T, the government said.
Netscape Communications Corp provided information and witnesses for the Justice Department’s lawsuit against Microsoft Corp. accusing the software maker of improperly keeping computer manufacturers from promoting competitors’ products.
The Federal Trade Commission used material from private lawsuits alleging anticompetitive conduct by Intel Corp when it sued the world’s largest chip maker in 2009, said J Robert Robertson, a former Federal Trade Commission official now at Hogan Lovells in Washington.
‘BENEFIT OF WORK’
“On the one hand, the agencies do like to get the benefit of work done by other law firms,” said Robertson, who represented H&R Block Inc this month in the Justice Department’s first merger trial in seven years. “On the other hand, you don’t want them interfering with what you’re doing.”
Since Overland Park, Kansas-based Sprint filed its lawsuit on September 9, it has attacked the proposed merger in court filings and public comments. It also teamed up with Cellular South Inc, based in Ridgeland, Mississippi, which filed a similar lawsuit on September 19.
Today’s hearing is the first to address any of the underlying antitrust issues in the case since the Justice Department sued to block the transaction on August 31.
AT&T says in court filings that Sprint, the third-biggest wireless carrier, fears increased competition from the merger and has pushed for internal records detailing Sprint’s transactions since 2004.
ABILITY TO COMPETE
Sprint, which has lost money for 15 consecutive quarters, argues that the proposed merger would weaken its ability to compete with AT&T, the second biggest, and Verizon Communications Inc, the market leader. The combination of AT&T and T-Mobile would form the country’s largest mobile phone company.
The last transaction the Justice Department challenged approaching the AT&T deal in size was the 2003 $8.4 billion Oracle Corp-PeopleSoft Inc merger. The deal was completed after the government lost its case.
Section 7 of the Clayton Act, passed in 1914 to supplement the Sherman Act, lets the government and private parties challenge mergers that might dampen competition or create a monopoly.
The Justice Department could get help from Sprint even if the suit’s dismissed, said Jeffrey Jacobovitz, an antitrust lawyer with McCarthy, Sweeney & Harkaway, PC in Washington.
“They can attempt to file amicus briefs with the court and feed the government information to support their case,” he said.
