Monday, March 21, 2011

USA - Obama's regulators face significant challenges in deciding the AT&T acquisition of T-Mobile USA

[wsj] AT&T Inc.'s proposed $39 billion acquisition of T-Mobile USA is as much a wager on the political environment in Washington as it is a bet on the future of the U.S. wireless market.

The phone giant's proposed acquisition represents a challenge to the Obama administration Justice Department, which has signaled it will police mergers more aggressively than under the prior Republican administration.

It also comes as the Federal Communications Commission, which also can effectively veto the deal, is wrestling with how to widen access to mobile broadband services, and preparing to issue a report that raises fresh concerns about competitiveness in the wireless market.

On AT&T's side of the ledger is a long history as one of the top-spending lobbying operations and campaign contributors in Washington, ties to influential lawmakers and policy makers in both parties, and the backing of the Communications Workers of America, the union that represents thousands of AT&T workers.
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Since 1989, AT&T has been the top corporate donor to members of Congress, shelling out more than $46 million in campaign contributions to both Republicans and Democrats, according to the Center for Responsive Politics. Last year, the company spent $15.4 million on lobbying in Washington. It had 93 lobbyists working on its behalf, federal lobbying records show.

The head of the Justice Department's antitrust division, Christine Varney, promised early in her tenure to more aggressively review mergers to assure they don't hurt competition. Before taking her current job, Ms. Varney was a partner at the law firm Hogan & Hartson, and specialized in technology antitrust matters.

But so far, the Obama Justice Department hasn't blocked a large, high-profile deal outright. Two controversial deals—Ticketmaster's acquisition of Live Nation Inc. and Comcast Corp.'s purchase of NBC-Universal—were both allowed to proceed, albeit with significant conditions.

Antitrust lawyers say AT&T's bid is riskier because it's largely a "horizontal" deal in which a company buys a direct competitor. The deals for Live Nation and NBCU were largely "vertical" deals involving companies operating at different stages of the distribution chain.

"This is the standard horizontal merger where, unless they can spinoff enough market share, I would expect a challenge," said Spencer Waller, an antitrust law professor at Loyola University Chicago

AT&T Deal Is Key Test for Obama Regulators

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