AT&T Business Merger With California Company Attracts Critics

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Friday, August 2, 2013.

The wireless communications market can be lucrative for those who play their cards right. AT&T has been highly successful in this business and is currently one of the largest wireless carriers in the industry. Now the company is looking to grow its market dominance even more by purchasing a California wireless competitor through a business merger. However, this has been met with significant resistance based upon federal antitrust laws.

AT&T's announcement that it is planning to purchase the California company, Leap Wireless, for $1.2 billion is causing many public interest groups to ask the federal government to take action to stop the merger. Those opposed to the deal argue that AT&T is already the second largest mobile carrier in the nation and that the wireless industry should be competing with each other to win customers through improvement in services, rather than more mergers. Leap Wireless is currently the sixth largest provider of wireless service in the United States.

Leap Wireless will enable AT&T to make a significant advance in the prepaid wireless market, which is currently AT&T's weakness. However, critics argue that because prepaid wireless service customers are usually low-income, younger individuals and those with bad credit, removing Leap Wireless from the marketplace will especially affect these disadvantaged individuals in a detrimental way. However, observers do not believe that the federal government will scrutinize the deal as harshly as AT&T's previous attempt to purchase T-Mobile USA in 2011.

On the other hand, nobody can tell for sure how the federal government will react to the attempted purchase of the California wireless company. Therefore, AT&T should be ready to justify its actions to federal regulators if required. It may even be necessary to argue in court for the right to complete the business merger. However, if this is the case AT&T will need to have a thorough understanding of the applicable laws in order to formulate an effective legal argument.

Source: Time, "AT&T’s $1.2 Billion Leap Wireless Buyout Faces Static," Sam Gustin, July 15, 2013

Recent Posts