Judge Seeks ‘Facts’ from Sprint in AT&T/T-Mobile Argument
A district judge appeared skeptical that Sprint Nextel had made a plausible argument that an AT&T/T-Mobile combination would harm competition, in oral argument Monday at the U.S. District Court in Washington. Sprint Nextel and C Spire had asked the court to deny an AT&T motion to exclude the two competitors from the lawsuit filed by the U.S. Justice Department against the AT&T/T-Mobile deal. Sprint and C Spire each filed antitrust complaints against the deal. Sprint and C Spire also argued for their separate motion that would give the competitors access to information learned in discovery in the government’s case against AT&T.
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Huvelle denied Sprint and C Spire’s motion to gain access to discovery information in the DOJ lawsuit. She called it a “wholesale request to become a party” and said it was not “efficient or fair” to have reciprocal discovery. The Justice Department had supported the motion. DOJ plans to call Sprint as a witness in the trial, and it would be helpful to allow Sprint to see the same data on AT&T that DOJ has, said DOJ attorney Joseph Wayland.
Citing the Twombly case, U.S. District Judge Ellen Huvelle said Sprint and C Spire needed to state facts in order to show Sprint’s claims were plausible. “Give me a fact somewhere,” she said at one point. “That’s what I'm looking for.” The U.S. Supreme Court agreed to hear the Twombly case -- a class action started on behalf of two phone subscribers and alleging the Bells conspired not to compete against each other. Huvelle asked why Sprint cited several cases in its lawsuit that happened before Twombly. The judge also asked if Sprint’s case assumed that Verizon will also raise prices and that the FCC won’t intervene, even though the commission requires roaming.
Huvelle questioned Sprint’s claim that the deal would hurt competitors’ access to handsets. She said one look at the newspaper showed that the handset market is highly competitive, and she asked “what’s so bad about exclusive contracts?” She also said she was skeptical that AT&T and Verizon control who gets Apple handsets. And she noted that C Spire just got an iPhone, and that Verizon was “incredibly successful” while AT&T had the iPhone exclusively. Apple is “not the only handset in town,” she said. Sprint attorney Steven Sunshine agreed there is competition in the manufacturer market but said the merger will give AT&T so much buying power that device makers will be pressured to favor them. And Sunshine said the iPhone exclusive is over, but exclusives still exist and are getting worse.
"Antitrust laws protect competition, not competitors,” said AT&T attorney Michael Kellogg. He said Sprint and C Spire haven’t alleged any facts in their claims against the merger. There are “dozens” of competitors making “hundreds” of handsets, he said.
Sprint and C Spire argued that the deal also would make it more difficult to secure roaming agreements. Kellogg countered the argument, saying AT&T and T-Mobile’s GSM networks are mostly incompatible with the other company’s CDMA networks. But the competitors argued that in a 4G world every carrier will be on the same technology, LTE.
There’s a 60 percent chance of a settlement between the companies and the DOJ, George Kohl, senior director of the Communications Workers of America, told us. There would be significant divestiture as part of a potential settlement, he said. If the case goes to court, it would be 50/50 on which way the decision would go, he said. The DOJ’s assertion that a national market is the relevant market appears to be a change of regulatory framework, creating risks going forward, he said, noting local market assessment has been used in judging past wireless mergers. Meanwhile, Leap Wireless hired Timothy Muris, chairman of FTC from 2001 to 2004, to represent it in the FCC’s review of the deal, a filing with the FCC said. Muris, of counsel to Kirkland & Ellis’s antitrust & competition group, was among lawyers signing acknowledgements of confidentiality.