Federal Communications Commission chairman Julius Genachowski on Tuesday circulated an order that finds that the pending merger of AT&T and T-Mobile is not in the public interest and should be referred to an administrative law judge.
The full commission must still vote on the proposal, but if approved, the commission is effectively rejecting the deal. Technically, the FCC cannot block a transaction; it can only approve, approve with conditions, or refer to an administrative law judge. In reviewing the deal, however, the commission found that a combined AT&T and T-Mobile would result in unprecedented concentration and massive layoffs, according to FCC officials, prompting today's order.
The FCC reviewed 200,000 pages of documents, and held more than 100 stakeholder meetings, including 30 with AT&T and T-Mobile. It also fielded 50 petitions to reject the deal from companies like Cablevision, C Spire, DISH, EarthLink, and Sprint.
If the full commission—which currently includes Republican Robert McDowell and Democrats Michael Copps and Mignon Clyburn—approves Genachowski's plan, the deal moves to the Office of Administrative Law Judges at the FCC, currently overseen by Judge Richard L. Sippel. It will then proceed like any other trial, with discovery, motions, witnesses, and the like. An initial decision from Judge Sippel will be returned to the FCC commissioners, who will issue their own decision, which will be reviewed by the federal courts.
It might not come to that, however. The Department of Justice has already sued to block the merger of AT&T and T-Mobile on similar anticompetitive grounds, and that case goes to trial in February. The FCC said it will hold off on its own administrative law trial until after a decision is made in the DOJ case; (though procedural tasks can be completed, like discovery and motions). If the DOJ wins its case, however, a permanent injunction is granted and the FCC's case is no longer necessary. If the DOJ loses, the FCC case can proceed.
In a statement, Larry Solomon, senior vice president of corporate communications for AT&T, said the FCC's move was "disappointing."
"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," Solomon said. "At this time, we are reviewing all options."
Vonya McCann, Sprint's senior vice president of government affairs, said the full record "more than justifies moving this matter to an Administrative Law Judge for a hearing."
"We appreciate Chairman Genachowski's leadership on this issue and look forward to the FCC moving quickly to adopt a strong hearing designation order," McCann said.
During a August conference call with various consumer groups that opposed the merger, Public Knowledge legal director Harold Feld said an administrative law hearing "is the kiss of death for these mergers" because they can be quite timely.
The last case of this size to be referred to an administrative law judge was EchoStar-DirecTV in 2002.