How AT&T Got to a Standoff With the Government

[ClarkUSA]

Source: The New York Times

The Justice Department’s lawsuit to block AT&T’s $39 billion takeover of T-Mobile USA took the company by surprise... For months, AT&T had met regularly with both regulators, furnishing them with details about the proposed deal, from competition assessments to the effect on local markets. Since announcing the merger, the telecommunications giant had signaled that it would be willing to make divestitures — potentially billions of dollars worth — to satisfy regulators.

As recently as Tuesday, AT&T insisted in a meeting with Justice officials that it wanted to present remedies, according to people briefed on the matter. The department did not tip its hand that it was preparing to sue, having only run down another list of pluses and minuses of the deal, two of these people said... But from the beginning, Justice Department officials expressed concern about the broader impact of removing the fourth-largest cellphone service provider from the national landscape — leaving only three big telecommunications providers. In meetings throughout the review process, antitrust lawyers signaled that they had serious issues about market concentration and taking out a significant competitor, according to another person briefed on the matter... Justice officials were worried that, having outlined a timetable of 12 months to 18 months for regulatory review, AT&T would take its time and hobble a rival in the interim.

In short, AT&T didn’t appear to get the hint that the Justice Department wasn’t satisfied with either the speed or the scope of potential remedies, according to this person. And as the matter moved up the hierarchy of department officials, consensus was building that AT&T was increasingly hard pressed to come up with a satisfactory solution.

The Justice Department gave AT&T a head’s up on Wednesday morning, shortly before filing the lawsuit, these people said.

Read more: http://dealbook.nytimes.com/2011/08/31/how-att-got-to-a-standoff-with-the-government/

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This is the most forceful antitrust move by President Obama thus far. I'm sure GOP mouthpieces will soon start whining in concert.

Let the battle begin.

[aquart]

1. I hope it gives them cover for breaking up Murdoch's mess.