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August 31, 2011 6:10 PM

Dozens of Am Law 100 Lawyers on Hand for DOJ's Suit Against AT&T

Posted by Brian Baxter

AT&T's lawyers from five Am Law 100 firms weren't enough to stop the U.S. Department of Justice from filing a complaint Wednesday seeking to block the company's proposed $39 billion acquisition of T-Mobile USA from Deutsche Telekom.

The acquisition has been opposed by AT&T's competitors and consumer advocacy groups and faced stiff scrutiny from regulators at the Justice Department's antitrust division and the Federal Communications Commission. But the Justice Department's action on Wednesday came as a surprise to AT&T, said the company's general counsel D. Wayne Watts in a statement released by the telecommunications giant.

AT&T has repeatedly met with regulators about the terms of the proposed merger with T-Mobile USA and "there was no indication" that the government would take steps to block the deal, Watts said. "We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed," he added. "The [Justice Department] has the burden of proving alleged anticompetitive affects, and we intend to vigorously contest this matter in court."

Justice Department officials said they opposed the acquisition because it "would result in tens of millions of consumers all across the [U.S.] facing higher prices, fewer choices, and lower-quality products for mobile wireless services," according to a statement from deputy attorney general James Cole. Cole, a former Bryan Cave partner sworn in earlier this year as the right-hand man to U.S. Attorney General Eric Holder, Jr., added that "consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers."

If approved, the merger would make AT&T the largest wireless carrier in the country, a title currently held by the Cellco Partnership, which does business as Verizon Wireless. If the merger with T-Mobile USA fails to be completed, AT&T will pay a $3 billion breakup fee and grant additional wireless spectrum rights to parent company Deutsche Telekom.

The government's 22-page complaint (PDF), filed in U.S. district court for the District of Columbia and assigned to federal judge Ellen Huvelle, seeks a permanent injunction barring the merger from going forward.

AT&T has assembled a formidable legal team to help the Dallas-based company navigate the regulatory review of its proposed acquisition of T-Mobile USA by the Justice Department and the FCC.

Sullivan & Cromwell is deal counsel to AT&T, Arnold & Porter and Crowell & Moring are serving as antitrust counsel before the Justice Department, and Wilmer Cutler Pickering Hale and Dorr is advising on FCC issues, according to our previous reports. In May, another longtime legal adviser to AT&T, Sidley Austin, was added to the squad.

All have been working closely with an in-house team from AT&T that includes Watts, vice president of federal regulatory affairs Joan Marsh, associate general counsel for FCC and external affairs Gary Phillips, and Jack Zinman, Jr., a former senior adviser at the National Telecommunications and Information Administration within the U.S. Department of Commerce.

Members of AT&T's board of directors include Phelps Dunbar senior litigation partner Reuben Anderson and former Akin Gump Strauss Hauer & Feld partner James Cicconi, a onetime top in-house lawyer at AT&T. (Former AT&T president and ex–Mayer Brown partner William Daley currently serves as President Barack Obama's chief of staff.)

Deutsche Telekom said in its own statement through T-Mobile USA that it was "very disappointed" by the Justice Department's actions, and would join AT&T in "defending the contemplated merger against the complaint in court."

Wachtell, Lipton, Rosen & Katz is acting as deal counsel to Bellevue, Wash.–based T-Mobile USA, while Cleary Gottlieb Steen & Hamilton and Wiley Rein are serving as antitrust and FCC counsel, respectively. David Miller is T-Mobile USA's chief legal officer and general counsel. Manfred Balz, a former Wilmer partner, serves as the top in-house lawyer for Deutsche Telekom.

AT&T is facing a 25-lawyer team from the Justice Department that includes acting assistant U.S. attorney general for antitrust Sharis Pozen, deputy assistant attorney general for antitrust Joseph Wayland, chief counsel for competition policy and intergovernmental relations Gene Kimmelman, director of civil enforcement Patricia Brink, and telecommunications and media enforcement section chief Laury Bobbish.

Pozen, a former Hogan & Hartson partner who released her own statement about the Justice Department's action against AT&T, was named acting antitrust chief in early August after her predecessor (and fellow Hogan alum) Christine Varney resigned to become a partner at Cravath, Swaine & Moore.

Wayland, a former Simpson Thacher & Bartlett partner who left the firm a year ago to join Main Justice, was considered a possible candidate to replace Varney. Kimmelman, a former deputy attorney general for antitrust, was among those considered last summer as a possible candidate to head the new Consumer Financial Protection Bureau. (The position eventually went to Richard Cordray, a former attorney general of Ohio, in July.)

Brink worked as deputy director of the antitrust division's office of operations until being promoted in December to director of civil enforcement, a new position. Bobbish previously served as assistant chief of the antitrust division's telecommunications task force.

As previously reported here, the FCC has hired Wilson Sonsini Goodrich & Rosati antitrust partner Renata Hesse in Washington, D.C., to help oversee its review of the merger between AT&T and T-Mobile USA. The FCC issued its own statement Wednesday through chairman Julius Genachowski, noting that the Justice Department's adversarial position "raises serious concerns about the impact of the proposed transaction on competition."

The regulatory process has also provided ample opportunities for a variety of Am Law 200 and smaller boutique firms to advise clients voicing their objections and support for a merger between AT&T and T-Mobile USA. Sprint Nextel, the nation's third-largest wireless carrier, has tapped Skadden, Arps, Slate, Meagher & Flom for antitrust counsel and D.C. telecom boutique Lawler, Metzger, Keeney & Logan as FCC counsel to advise on issues related to AT&T's bid for T-Mobile USA.

Paul Hastings spun off off its telecommunications practice into a separate firm earlier this month because of a conflict caused by its litigation work for AT&T and representation of regional wireless provider MetroPCS Communications, which has objected to certain aspects of the merger.

Some $150 million in investment banking advisory fees are also on the line if AT&T's bid to buy T-Mobile USA is successfully thwarted, according to The New York Times, which has a rundown on several megadeals that have drawn the ire of the Justice Department in recent years.

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