P.R. Justice Department likely to oppose AT&T/T-Mobile deal

Written by  //  September 21, 2011  //  Telecommunications/Technology  //  No comments

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The Puerto Rico Justice Department will express its position on the proposed acquisition by AT&T of T-Mobile’s assets in coming days, likely opposing the deal due to concerns about its potential effects on the local competitive landscape, News is my Business learned.

Although the head of the agency’s Office of Antitrust Affairs, Attorney José Díaz Tejera, would not reveal the course of action, or the position the agency will take, he did confirm Justice has been working closely with the Telecommunications Regulatory Board to establish its opinion on what the deal could represent for the island.

Last month, the TRB filed its opposition to the deal at the Federal Communications Commission, claiming it could be harmful for competition, as well as pricing and services.

“We’re evaluating the course to take, and will likely take action later this week or early next,” he said Tuesday, noting that to that effect, the agency has been in talks with Attorney Matthew Hammond, of the U.S. Department of Justice’s Antitrust Division, and Attorney Geralyn Trujillo, who has been the liaison between the agency and state governments on the AT&T/T-Mobile transaction.

Furthermore, Díaz Tejera said a decision is pending on whether the action will be independent or jointly with its federal counterpart, which on Aug. 31 filed a suit in a Washington, D.C. court to block the proposed $39 billion wireless merger.

“We’re still analyzing that to see which action is most practical. We haven’t filed anything yet, but will likely do so in coming days,” said Díaz Tejera, who is also deputy secretary of the agency. “This action requires coordination among the states, the U.S. Department of Justice, and the TRB as well.”

AT&T announced its intentions to acquire rival T-Mobile in March, unleashing a flurry of mixed reactions from competitors, regulators, unions and trade groups. While competitors and regulators have voiced concerns over the level and possibly lack of competition that will be left in the market if the mammoth transaction is approved, a number of unions and trade organizations have expressed their approval of the deal saying it could open the door for new jobs and economic opportunities.

While AT&T has reiterated the merger is necessary to meet current and future network demands, T-Mobile’s parent, Deutsche Telecom has said it will no longer invest in its U.S.-based operation, making the deal practically non-negotiable. Following the US DOJ’s move, AT&T has reportedly begun exploring the possibility of divesting spectrum and subscribers to competitors to appease the agency’s concerns.

In Puerto Rico, the corporate marriage would join the Number 1 and Number 3 carriers, making AT&T the dominant provider competing against Claro, Sprint, and Open Mobile. Industry sources have said AT&T has approached Claro’s parent, América Móvil for a possible deal for the local T-Mobile property.

A different analysis process
“When it comes to evaluating mergers, the analysis is somewhat different that what is done in the case of a traditional monopoly,” Díaz Tejera said. “In this case, we have to evaluate the interest a state has in having a company take reasonable control of the market.”

“That’s done based on the particular idiosyncrasies of the competition in the geographic area, which in Puerto Rico’s case is the entire island, as well as concentration indexes and other issues. In this case, it involves companies that participate in a market regulated by an agency, the TRB,” he said.

If the local Justice Department takes the step, it will be joining seven other Attorney Generals which late last week joined the U.S. DOJ’s move to block the transaction.

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