University of Iowa law professor Herbert Hovenkamp said the Justice Department is following a set of new guidelines, issued late last year, that make it clearer when mergers should be challenged on antitrust grounds.
“I don’t think they are overreaching here,” Hovenkamp said. “If there is a broader message here, it’s that the government intends to enforce these new guidelines.”
Besides being forced to divulge potentially damaging information, AT&T will face other risks if it doesn’t settle with the Justice Department. Going to trial will take months, or even years—leaving the company in a legal limbo that could depress its stock price and cause customers and key employees to defect.
Also, as they try to prove their case, antitrust lawyers sometimes obtain confidential eMails that contain embarrassing snippets and present other evidence that can make companies look bad.
If AT&T persists, antitrust experts said that it’s better off going up against the Justice Department than the Federal Trade Commission, which also handles antitrust reviews.
That’s mainly because lawsuits with the Justice Department are contested in federal courts. By contrast, the threshold for the FTC to block deals is generally lower, and the ensuing legal skirmishes occur in administrative law proceedings that drag on longer.
In its civil antitrust lawsuit, the Justice Department said the merger would stifle competition in the wireless industry.