August 31, 2011, 1:16 PM — Despite what could be interpreted as a political bribe attempt, the U.S. Department of Justice is suing to block AT&T's planned $39 billion acquisition of rival T-Mobile USA.
Arguing that the merger of two of the four major U.S. wireless carriers would hurt consumers through less competition and higher prices, the Justice Department filed the suit on Wednesday, the same day AT&T patriotically promised to un-offshore 5,000 call-center jobs if only antitrust regulators would approve the controversial deal.
The lawsuit comes after the Federal Communications Commission last week "re-started the clock" on its own antitrust review of the proposed merger.
(Also see: AT&T, T-Mobile chief executives pitch merger to skeptical antitrust panel )
In the Wednesday filing, the Justice Department said, "AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market."
Yes and no. T-Mobile is the No. 4 wireless carrier in the U.S., with about 11% market share. It's no threat to AT&T or Verizon, which each have about 31% of the market. But its acquisition by AT&T would leave only three national wireless carriers, with one of them (Sprint Nextel) a marginal player at about 17% market share.
It'll be interesting to see if AT&T keeps using the "jobs" argument raised by its offer, and how hardball it's willing to go. Will AT&T accuse antitrust regulators of "holding jobs hostage" by blocking the purchase? Will it start implying that layoffs could be another result of rejection by regulators? Or will it go the other way and sweeten the pot? 10,000 call-center jobs!
More than ever before, the AT&T/T-Mobile merger is a political and P.R. battle. And it's being fought against a backdrop of huge discontentment with and resentment toward the federal government. Watch for it to become an issue for Republican presidential candidates looking for another example of how a meddlesome federal government can hurt job-creating businesses and hard-working Americans.
What's sure to be lost in the political debate is the fact that AT&T's job offer appears totally contingent upon approval of its T-Mobile USA purchase from Deutsche Telekom. Here's how the statement reads (my italics):
AT&T today committed that after closing its proposed merger with T-Mobile USA, it will bring back 5,000 wireless call center jobs to the United States that today are outsourced to other countries.
Today’s commitment results from AT&T developing detailed analysis focused specifically on identifying opportunities with the T-Mobile merger to bring good-paying wireless call center jobs back to the United States.
Sounds like no approval, no repatriated jobs. Correct me if I'm wrong, AT&T.
Perhaps AT&T's conditional commitment is understandable. For without T-Mobile's assets, you could hardly expect a company like AT&T -- which had only $3.66 billion in second-quarter profits -- to re-offshore 5,000 call-center jobs, no matter how "good" it would be "for our employees, our customers and our country," as Chairman and CEO Randall Stephenson put it in a statement earlier Wednesday.
You see, there are limits to patriotism.
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