Legal expert: DOJ’s suit against AT&T may be a negotiating tactic

The Justice Department’s decision to sue to stop AT&T’s merger with T-Mobile may be a negotiating tactic, an experienced antitrust lawyer said.
 
“[The Justice Department] is in a better negotiating position if they negotiate once they’ve filed [the suit],” said David Balto, a former policy director for the Federal Trade Commission and a senior fellow with the Center for American Progress.
 

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Sharis Pozen, acting chief of DOJ’s antitrust division, said Wednesday at a news conference announcing the lawsuit that “our door is open” for AT&T to address the agency’s concerns.
 
Balto said DOJ’s complaint against AT&T is not as robust as he would expect if the agency planned to go to court.
 
“There are no smoking guns,” Balto said. “The red meat is missing.”
 
In particular, Balto said he would have expected DOJ to have included sworn statements from telecom executives.

Balto said recent cases show DOJ is willing to file a complaint to gain leverage in negotiations.
 
He pointed to a case involving George’s Family Farms, an Arkansas-based chicken processor. DOJ sued the company in May and settled the case one month later.
 
An out-of-court settlement between AT&T and the government might require AT&T to guarantee low-cost phone plans or give up some of its assets to preserve competition.
 
Negotiations between AT&T and DOJ were still in early stages, and it would be premature for DOJ to cut off the dialogue, Balto said.
 
Andrew Schwartzman, policy director for Media Access Project, a nonprofit law firm that opposes the deal, disagreed.
 
“It is very hard to come up with a scenario for concessions AT&T could make that would resolve the concerns set forth in the complaint,” he said.
 
He pointed to the complaint’s finding that AT&T and T-Mobile compete head-to-head in 97 of the nation’s top 100 markets. The government’s complaint also described T-Mobile as an innovator in price and technology.
 
“That’s not replaceable in a settlement,” Schwartzman said.
 
If the lawsuit were just an attempt to gain leverage, Schwartzman said, he would expect DOJ to have given AT&T more warning as a courtesy to preserve good relations for future negotiations.
 
Instead, the lawsuit seemed to catch AT&T off-guard. The company was trumpeting new job promises to promote the deal just hours before news of the suit broke.
 
Wayne Watts, AT&T’s general counsel, said he was “surprised and disappointed” by the action.

“There was no indication from the DOJ that this action was being contemplated,” he said Wednesday in a news release.