AT&T Faces New Roadblock on T-Mobile

AT&T Inc. (T)’s planned $39 billion purchase of T-Mobile USA Inc. faces a new roadblock as Federal Communications Commission Chairman Julius Genachowski asked commissioners to send the proposal to an agency judge for a hearing.

The hearing, which could lead to a rejection of the transaction, was proposed in an order Genachowski offered today for consideration by the full FCC, according to officials who spoke today on condition of anonymity. Agency staff had found the proposed merger would significantly diminish competition and wouldn’t increase hiring, one official said.

The hearing would take place after the resolution of a Justice Department court challenge to the transaction, the FCC officials said. The antitrust case is scheduled for trial in February.

AT&T is “reviewing all options,” Larry Solomon, senior vice president of corporate communications, said in an e-mailed statement.

“The FCC’s action today is disappointing,” Solomon said. “It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both.”

The FCC can designate a transaction for a hearing, which is akin to a trial, when it cannot find the deal is in the public interest. The administrative law judge presiding over the hearing delivers an initial decision that goes to agency commissioners for a vote.
‘Significant Obstacle’

“A hearing could go on for six to 12 months,” Andrew Lipman, a Washington-based partner with Bingham McCutchen LLP, said in an interview. “It’s certainly a significant obstacle and roadblock.”

The last time the FCC designated a media merger for a hearing was in 2002, when the agency challenged Echostar Communications Corp.’s bid for fellow satellite company DirecTV (DTV), Lipman said. The companies dropped their bid, he said.

Genachowski released a statement on Aug. 31, the day the Justice Department sued to block the deal, that cited “serious concerns about the impact of the proposed transaction on competition.”

The purchase of Bellevue, Washington-based T-Mobile would eliminate one of four national U.S. wireless carriers. AT&T has said the transaction would help it bring wireless high-speed Internet service to more people.
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