AT&T/T-Mobile case faces restart

By Brendan Sasso - 12/09/11 02:11 PM ET

The Justice Department told a federal judge on Friday that AT&T needs to re-apply with the Federal Communications Commission (FCC) before it can move forward with its bid to buy T-Mobile.

Justice Department lawyer Joseph Wayland said the government will file a motion next week to put its lawsuit against the merger on hold until AT&T refiles with the FCC.

AT&T withdrew its application last week after the agency took a step toward blocking the $39 billion deal. AT&T said it wanted to focus on the Justice Department's lawsuit, which challenges the deal on antitrust grounds.

But the Justice Department argued on Friday that without an application at the FCC, there is no longer an active deal to challenge. On Tuesday, the Justice Department will file a motion to either delay the case or withdraw it entirely until AT&T re-applies with the FCC.

AT&T will respond to the motion by Wednesday, and the court has scheduled a hearing for Thursday at which Judge Ellen Huvelle is expected to issue a ruling.

At Friday's hearing, Huvelle questioned why she should move forward with the case.

"You could change the deal in a month and everybody's time will be wasted," Huvelle told AT&T's lawyer, The Wall Street Journal reports.

She also said she wanted to hear from the FCC and speculated about asking their lawyers to appear.

AT&T urged the judge to maintain the current schedule with the trial beginning in February.

"We are anxious to bring to the American consumer the benefits of increased wireless network capacity and efficiencies that can only arise from combining the resources of AT&T and T-Mobile USA," Wayne Watts, AT&T's general counsel said in a news release. "We are eager to present our case in court."

Consumer advocacy group Public Knowledge applauded the Justice Department's move.

“AT&T is attempting to use the court system to force approval of the deal from the FCC and to avoid a break-up fee before the deal’s deadline next year," Harold Feld, Public Knowledge's legal director, said in a news release. "As Huvelle pointed out, any concerns about timing, however, are of AT&T’s own making."

He urged AT&T to give up on the deal.

“Rather than cost taxpayers and private companies millions of dollars in fees to pursue this fantasy, AT&T should abandon a transaction which will raise prices, hurt consumers and stifle innovation,” he said.