Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Tuesday, March 22, 2011

Thoughts on AT&T/T-Mobile Merger and the Breakup Fee

Posted by D. Daniel Sokol

The thing that jumps out at me is a $3 billion break up fee to T-Mobile. This means in my mind that any merger challenge will be fully litigated out. That is, the parties seem to have lots of confidence in the merger. Personally, I am not convinced it is such a slam dunk. Put differently, I would love to be the lead attorney of the government case because this is the kind of case (where I give the government a 55-45 chance of winning the antitrust case) that can make a government lawyer's career.

But is a success by the merging parties actually a success? If a "success" means the deal goes through, I would suggest we redefine what success means as it may come at the expense of significant divestitures imposed either by DOJ or the FCC (hello Jon Baker) -- assuming that the parties can find someone who can buy the divested assets.

The session break hallway discussions at the ABA Antitrust Section Spring Meeting next week will be a lot more lively than I would have anticipated just three days ago. I also think this deal seems to be employing lots of attorneys in DC for the merging parties and other interested parties.

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Interesting point. Is this breakup fee discourage challenges to the merger? Should the breakup fee be declared unenforceable on public policy grounds?

Posted by: Kien | Mar 22, 2011 11:13:43 PM

There are people here who know more than I do, so I will ask:

Can the NY AG block this deal? Same question for California, and every other state where that state's market is significant enough to make the parties give up.

Or is there federal pre-emption, so that if DoJ and FCC let it go, then the deal can't be stopped?

Posted by: TomPaine4 | Mar 29, 2011 4:37:46 PM

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