AT&T and T-Mobile Abandon Merger Effort

December 20, 2011. AT&T announced in a release on December 19 that "after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA".

T-Mobile USA stated in a release that "AT&T and Deutsche Telekom (DT) have mutually decided to terminate their agreement for AT&T to acquire T-Mobile USA. This announcement effectively ends the acquisition process launched March 20."

AT&T and T-Mobile announced their merger plans on March 20, 2011. See, story titled "AT&T to Acquire T-Mobile USA" in TLJ Daily E-Mail Alert No. 2,205, March 21, 2011.

On August 31, the Department of Justice's (DOJ) Antitrust Division filed a complaint [25 pages in PDF] in the U.S. District Court (DC) against AT&T, T-Mobile USA and Deutsche Telekom that seeks an injunction against AT&T's acquisition of T-Mobile USA on the grounds that it would would substantially lessen competition in violation of Section 7 of the Clayton Act, which is codified at 15 U.S.C. § 18. See, story titled "DOJ Files Complaint to Block AT&T Acquisition of T-Mobile USA" in TLJ Daily E-Mail Alert No. 2,298, August 31, 2011.

The Federal Communications Commission (FCC) has not issued a final order denying applications associated with the proposed merger. However, it has taken actions directed at obstructing the merger. See, stories titled "Genachowski Proposes That FCC Designate AT&T T-Mobile Merger for Administrative Hearing" in TLJ Daily E-Mail Alert No. 2,313, November 22, 2001, and "FCC Staff Releases Items in AT&T T-Mobile Merger Proceeding" in TLJ Daily E-Mail Alert No. 2,315, November 29, 2011. This FCC's proceeding is WT Docket No. 11-65.

AT&T stated in its release that the actions of the FCC and DOJ "to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled."

AT&T also stated that "To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom."

Randall Stephenson, Ch/CEO of AT&T, stated that policymakers "should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC."

Also, "policymakers should enact legislation to meet our nation's longer-term spectrum needs", said Stephenson.

Sharis Pozen, acting Assistant Attorney General in charge of the DOJ's Antitrust Division, stated in a release that "Consumers won today. Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties' abandonment, we achieved that result."

FCC Chairman Julius Genachowski stated in a release that "The FCC is committed to ensuring a competitive mobile marketplace that drives innovation and investment, creates jobs and benefits consumers. This deal would have done the opposite. The U.S. mobile industry leads the world in mobile innovation, and we agree with AT&T that Congress should pass incentive auction legislation that will unleash new spectrum for mobile broadband."

Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "When AT&T announced this takeover plan, most antitrust attorneys knew this would violate the laws set up to maintain a competitive marketplace. AT&T was clearly counting on its political muscle and influence conglomerate to tilt the system’s decision makers in their favor and to shy away from vigorous enforcement of the law. For once the 99% have reason to be pleased that the most entrenched special interest didn't win."

He added that "The Department of Justice, FCC, and the Obama Administration deserve praise for standing up to an awesome political assault from influence peddlers and the various groups heavily encouraged or threatened to support this takeover merger."

Harold Feld of the Public Knowledge (PK) stated in a release that "In this age of cynicism, it is important for the American people to see that Washington does not always go to the highest bidder. The Department of Justice and the Federal Communications Commission stood up to tremendous lobbying pressure as AT&T spent tens of millions of dollars trying to push this merger through."

The Tech Freedom (TF) stated in a release that "Nearly two years ago, the Obama FCC declared a spectrum crisis. But Congress has refused to authorize the agency to reallocate underused spectrum from television broadcasters and government agencies--which would take years anyway."

The TF continued that "The AT&T/T-Mobile merger would have eased this crisis and accelerated the deployment of next-generation 4G networks. Yet the government killed the deal based on formalistic and outdated measures of market concentration--even though the FCC's own data show dynamic competition, falling prices, and new entry. The disconnect is jarring. Those celebrating the deal's collapse will wake up to a sober reality: There is no Plan B for more spectrum."