A federal district judge on Wednesday, Sept. 21, set Feb. 13 for the start of a four- to six-week trial of the Department of Justice's antitrust lawsuit against AT&T Corp.'s $39 billion purchase of Deutsche Telekom AG's T-Mobile USA.
U.S. District Court Judge Ellen S. Huvelle scheduling decisions came down as neither side presented an indication that settlement of the dispute is likely.
Jeff Silva, senior policy director for telecommunications issues for Medley Global Advisors LLC, who attended the hearing, said the lack of discussion of any possible settlement negotiations was the most obvious missing element of the hearing. "It didn't have the ring of settlement," he said.
Mark Hansen, an attorney for Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, representing AT&T, told the judge that the companies won't seek to dismiss the Justice Department lawsuit and want to head to trial on the issues in the suit as quickly as possible.
"We are already months behind where we wanted to be," he told the judge.
He said AT&T's deal with Deutsche Telekom originally anticipated the deal's closing this year or early next year but allows either side to easily ask for a three-month extension if the deal hasn't received federal regulatory approval by March 20. A second three-month extension is possible but depends on company officials certifying the deal can be completed by Sept. 20.
AT&T had wanted an earlier trial, arguing the government had obtained extensive evidence from the companies and should be able to proceed, but the judge sided with the government on its request for additional time to complete discovery.
AT&T in a statement after the hearing said though there was no mention of settlement, it and Deutsche Telekom "are working on parallel paths" on the complaint, "considering solutions, while simultaneously preparing for trial."
"We are hopeful that we can reach a solution with the DOJ that addresses their concerns, but if not, we will be well prepared for trial. We remain confident that we'll reach a successful conclusion."
Deputy Assistant Attorney General Joseph F. Wayland told the judge the Justice Department's quick decision to oppose the merger meant it still had to obtain a number of depositions from competitors on the merger's impact.
The judge, however, repeatedly expressed skepticism about attempts by Sprint Nextel Corp. and by Cellular South Inc. to use the Justice Department's antitrust suit as a vehicle to attach their own antitrust cases against the deal.
Hansen said AT&T and Sprint will move next week to dismiss those two suits and argued that their claims on roaming issues, handset availability and bandwidth differ from those of the Justice Department and raise different issues and that the private cases should not be consolidated with the government's.
Steven Sunshine, North American group leader of Skadden, Arps, Slate, Meagher & Flom LLP's antitrust and competition practice, representing Sprint, denied there were significant differences between the cases. "The case we have and Justice's is the exact same case," he said. He described the separate lawsuits as providing "real world views" to buttress the Justice Department arguments and said if the Justice Department doesn't win competitors would have "precious little" to pursue on their own.
Huvelle said she was concerned that combining a trial of the Justice Department's claims with those of competitors would lead to an unwieldy deposition process and witness testimony.
The trial "is getting longer and longer each time I ask [a question]," she said. "I just don't see this [the two competitors' lawsuits] as being precisely compatible."
Wayland said that at trial much of the Justice Department case will focus on testimony from adverse witnesses and asked to present them in live court session, rather than in deposition format.
Each side in the trial has asked for up to 30 witnesses, only some of whom would be presented live.
While the judge said the main trial will start in February, she outlined plans for an earlier hearing to present a few witnesses to generally talk about with wireless market.
Seven states have joined the Justice Department in its suit.
Separately Wednesday, AT&T officials took issue with comments of Sprint Nextel CEO Dan Hesse implying that his company could still acquire T-Mobile if the DOJ suit prevails. Speaking at a Goldman, Sachs & Co. conference, Hesse said any potential T-Mobile buyer will need to demonstrate that the benefits of removing T-Mobile from the market will outweigh the downsides. And while Hesse was careful not to state that Sprint would pursue a merger should the AT&T deal fall through, he said, "you could make a very, very strong argument" that combining two value wireless players would give the combined company the scale to compete better with AT&T and Verizon Communications Inc.
James Cicconi, AT&T senior executive vice president, external and legislative affairs, jumped on Hesse's statement as proof that Sprint Nextel's opposition to the AT&T deal has nothing to do with protecting competition.
"For months Sprint has spoken disingenuously about their motives for opposing AT&T's merger with T-Mobile," Cicconi said. "Now, Mr. Hesse's public musings have made their motives much more clear. That they would act in their own economic interest is not surprising. That they would expect the United States government to be a willing partner certainly is."
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