AT&T Inc. (NYSE:T)
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By Brent Kendall
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 13, 2018).
WASHINGTON -- Tuesday's AT&T ruling was a major blow for the Justice Department, putting its antitrust enforcers in the position of having to regroup quickly, as a heavy workload awaits them.
Several other closely watched mergers are already on the DOJ's plate for review and could require tough decisions. Topping that list is the proposed combination of T Mobile US Inc. and Sprint Corp., a deal that would leave the U.S. dominated by three national wireless carriers. Obama administration officials at the Justice Department were firmly opposed to further wireless consolidation, but the companies decided to make a run at it with a new sheriff in town.
The wireless merger, a "horizontal" deal that would combine two head-to-head rivals, is far different in character from AT&T's Time Warner acquisition, which will vertically integrate two complementary companies. But whether it is the T Mobile deal review or another matter, the Justice Department will have to consider how willing -- and how soon -- it is willing to roll the dice again in court.
Cleveland State University law professor Christopher Sagers said he doesn't expect the Justice Department to sit on its hands after losing on AT&T. But he said the ruling could temper its appetite for bold cases challenging future vertical mergers and lead it to focus instead on big, more traditional cases.
"I just think they will become more like the Obama administration," Mr. Sagers said. "Litigated challenges will become plausible only for the biggest horizontal deals."
Gene Kimmelman, president of the public-interest group Public Knowledge and an antitrust official in the Obama Justice Department, said everything that transpired in the AT&T case "demonstrates exactly why the Obama administration was very cautious about litigating vertical mergers."
The department, for example, during the Obama era in 2011 allowed Comcast Corp. to acquire control of NBCUniversal, choosing to impose restrictions on Comcast's conduct instead of challenging the deal outright.
Mr. Kimmelman, however, supported the challenge to AT&T and said the current Justice Department will have to decide whether to stick to its guns.
"Unless Justice Department quickly puts down a marker that it will litigate another vertical case, we could have massive consolidation across industries," he said.
The Justice Department could face another transformative entertainment deal soon if Comcast follows through with its plans for a bid to buy the bulk of 21st Century Fox Inc.'s assets.
Other vertical deals are already pending, including two major ones in the health-care sector: CVS Health Corp.'s planned acquisition of insurer Aetna Inc., and Cigna Corp.'s pending takeover of pharmacy-benefit manager Express Scripts Holding Co.
The AT&T decision "may make it harder for the Department of Justice to attempt to block" the two deals, Wells Fargo analysts wrote Tuesday.
While U.S. District Judge Richard Leon was tough on the Justice Department in the ruling, he went out of his way to say he didn't mean for his decision to be a categorical setback to bringing future cases. Instead, he said, his holding was based solely on the facts of the matter in front of him.
"The temptation by some to view this decision as being something more than a resolution of this specific case should be resisted by one and all!" he wrote.
--Anna Wilde Mathews contributed to this article.
Write to Brent Kendall at firstname.lastname@example.org
(END) Dow Jones Newswires
June 13, 2018 02:47 ET (06:47 GMT)
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