FCC 'shocked, shocked' that AT&T lied about merger with T-Mobile
A draft report released by the Federal Communications Commission (FCC) on Nov. 29 found that AT&T's proposed merger with German-owned cellphone carrier T-Mobile would not be in the public interest because it would substantially reduce competition among the four top mobile phone providers and raise prices for consumers.
This followed similar findings from the U.S. Department of Justice, as well as public opposition to the deal from senior members of Congress, and was not a surprise. The real “news” in the report was the FCC's finding that AT&T had publicly lied about the benefits of its proposed merger with T-Mobile — telling the public, media, and federal regulators that the deal was necessary to modernize its wireless phone network and would lower prices and create more jobs*, while its internal documents showed that its public claims were untrue.
in addition to rejecting AT&T's claims on a factual basis, the FCC report cited internal company documents that contradicted its public statements on the supposed benefits of the merger. A November 29 CNN story by David Goldman noted that the agency released the report despite the fact that AT&T has already withdrawn its request for the deal. "Many analysts say they believe that AT&T's withdrawal [of the merger request] was in part an attempt to prevent the FCC from going public with its reasons for opposing the deal", Goldman wrote.
He goes on to report that the agency plans to submit an un-redacted version of its findings to the Justice Department, which filed suit in August against the telecom giant for anti-trust violations related to the merger. The court trial on the case is expected to begin in February.
One would think that the FCC report was pretty much the last nail in the coffin of this typically egregious deal, but the CNN story notes that the Commission had the option of allowing AT&T to the withdraw its merger application “with prejudice”, meaning that the agency would look disfavorably on any deal that resembles the company's original proposal. Instead, the FCC suggested that if the company re-submits the merger application, it use the agency's report as a “roadmap” to win approval.
In other words: “We caught AT&T lying to us (and everyone else) about the reasons for and benefits of this deal, but rather than prosecute the company for knowingly submitting false testimony to the government, we'll pretend that none of that ever happened if they come back and tell us what we want to hear”. Only in America can companies such as AT&T get bite after bite of the regulatory apple, despite being caught repeatedly lying, cheating, and stealing. That AT&T so brazenly did so indicates that, based on previous experience, they anticipated little or no consequence for doing it yet again.
All the more reason for a corporate “three strikes” rule ...
Update: The Justice Department asked the court hearing the anti-trust suit to either dismiss the case, or allow the DOJ to withdraw it "without prejudice", meaning AT&T could re-file its merger application at a later date. But few expect it to do so, despite its claims to the contrary: The judge in the case was quoted as saying that “We don’t have any confidence that we are spending all this time, effort, and taxpayer money and that we’re not being spun” by AT&T's claim that it plans to procede with its merger application. In other words, yet another branch of the government that doubts what AT&T says ...
Update 2: Less than 12 months after AT&T told the government that merging with T-Mobile was the only way it could get the wireless spectrum needed to modernize its cellular network to the next-generation standard known as LTE, it announced that it will complete the process by 2014 with bandwidth aquired from other companies. "AT&T may have believed that the T-Mobile merger was the best, fastest way to get to a full LTE build, but it’s certainly disingenuous of them to claim that it was the only way for them to get there," said Joshua King, a former AT&T Wireless vice president quoted in an Ars Technica article about the company's "state and switch" tactics.
* “It’ll create jobs” is the mantra used to justify any and every corporate action these days, despite decades of U.S. companies moving millions of jobs to cheaper and less regulated/humane labor markets overseas, and generally doing everything possible to reduce the size of their workforces. Moreover, it defies logic and common sense (to say nothing of historical experience) to believe claims that these mergers and acquisitions can somehow simultaneously allow corporations to save money by eliminating redundant positions and also create new jobs in the process ...