AT&T urges court to dismiss Sprint Nextel's suit

AT&T Inc. today asked a federal judge in Washington to dismiss the suit Sprint Nextel Corp. filed to block the rival's planned merger with T-Mobile USA.

Sprint sued to block the planned $39bn deal about a week after the U.S. Justice Department filed an antitrust action in Washington federal district court.

Lawyers for AT&T said in court papers filed today that Sprint does not have standing to sue. "Nothing alleged in its complaint is half so significant as the fact that Sprint filed it," AT&T's lawyers said.

The attorneys, including Mark Hansen of Washington's Kellogg, Huber, Hansen, Todd, Evans & Figel, said Sprint knows the merger will enhance competition and make AT&T a more "formidable" rival.

"What is good for consumers is bad for Sprint, and that is why Sprint has filed suit," AT&T's lawyers said.

AT&T's attorneys said Sprint, represented by Skadden, Arps, Slate, Meagher & Flom, has attempted to "manufacture" standing, arguing that the proposed deal, if it succeeds, will impair the company's access to inputs to provide service. Sprint contends, among other things, the merger will enhance AT&T's roaming services, increasing Sprint's costs.

But AT&T argued that Sprint, on a "technologically incompatible" network, doesn't purchase roaming services from AT&T or T-Mobile.

Sprint, according to AT&T, has not provided any factual basis for alleging the acquisition, announced in March, would hurt Sprint's ability to buy advanced wireless devices.

Sprint's attorneys said in the complaint that the proposed deal is "brazenly anticompetitive. In one fell swoop, AT&T's proposed purchase would eliminate one of four national competitors and marginalize a second (Sprint), pushing the market back toward a 1980s-style cell phone duopoly that would force consumers to endure higher prices and be denied the fruits of vigorous innovation."

AT&T's lawyers said Sprint, as a competitors, is "categorically without standing" to complain about any alleged effects of the proposed deal between AT&T and T-Mobile.

Hansen said in court papers that "when a competitor like Sprint sues to prevent a competitor's merger, it generally reflects anxiety that the transaction will make the market more competitive, not less, reducing the competitor's profits."

U.S. District judge Ellen Segal Huvelle said Sprint must respond to the motion to dismiss by Oct. 13. The judge said she will hear the dispute on Oct. 24.

(Published by LegalTimes - September 30, 2011)