Sprint’s lawsuit to stop the proposed merger between AT&T (NYSE: T) and T-Mobile went before a federal judge today. One antitrust expert explains why Sprint (NYSE: S) may be on a legal limb and what it must do to avoid having the case tossed out of court.
According to Washington lawyer, Andre Barlow, Sprint faces a few hurdles in persuading the judge not to grant AT&T’s petition to dismiss the case. The main problem for Sprint is that the country’s anti-trust laws are designed to protect consumers not competitors. This has led AT&T to argue that its rival lacks standing to even bring the lawsuit in the first place.
To get around the problem of standing, Sprint must show that it is challenging the merger not as a competitor but as a customer in its own right.
“Sprint is coming in with its customer hat and saying ‘AT&T’s merger with T-Mobile will raise our roaming and our backhauling charges’,” said Barlow, referring to two forms of services that one phone company can charge another for using its network.
If the court buys this argument, Sprint must also show that there is good reason for it to be involved in a case that it is already being fought by the government. The Department of Justice filed a complaint on August 31, asking the same court to apply the country’s antitrust laws and stop the merger.
Barlow said it is “odd” for a party to file a lawsuit to stop a merger when the government has done so already but that such a move is not unprecedented. In this case, he said, Sprint may be concerned that the Justice Department will not place every essential argument before the courts. Another possible motivation for Sprint may lie in the fact that the discovery process of the litigation provides it with a chance to peek at AT&T documents.
If Sprint succeeds in persuading the court not to dismiss the complaint, it is unclear what will happen next . Arguments in the case between AT&T and the government are slated to take place on February 13 and the court has the option of ordering the two cases to be consolidated. Alternately, the court could allow Sprint’s litigation to proceed in parallel or it could stay the Sprint case pending the February arguments.
The judge is expected to rule in coming weeks over whether Sprint, which filed the lawsuit on September 9, can remain a part of the litigation.