Kicking the discussion over the AT&T merger into a new venue—the courts—could be a savvy political decision by the Justice Department to cut off political debate as soon as possible.
The decision comes weeks before anyone expected, and before the Federal Communications Commission finishes its review. But there were clear incentives for the department to act quickly.
AT&T, after all, was winning the political conversation over this merger. Every day the deal stayed in the political realm—a discussion on Capitol Hill and in the media, rather than in the courts—it became a little tougher for Justice to block the deal without receiving significant political flak.
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Even as Justice Department officials prepared to announce on Wednesday that they would move to block the deal, AT&T was launching a new campaign to emphasize all the ways the mega-merger with T-Mobile would create jobs—conveniently, in the same week the Obama administration will face new jobs data.
The company promised to bring 5,000 call-center jobs back to the United States from overseas if the merger is approved. It also cited a study that said its network investments would create 96,000 new U.S. jobs.
“AT&T was playing a very strong political card,” said Jeffrey Silva, a telecom analyst at Medley Global Advisors.
The company had amassed the support of most state governors, unions, Democrats, and Republicans in Congress, countless state officials, and a fleet of influential nonprofit groups. Their unspoken message was that there could be ramifications if the administration disappointed such a wide breadth of supporters too close to the election.
Now, instead of facing lawmakers in two more hearings this fall, AT&T will face a federal district judge in a forum where its political influence doesn’t matter.
The merger could still be approved if a judge sides with AT&T over the Justice Department. The parties could even settle out of court if AT&T is able to persuade the department to drop the suit. The court could reject the Justice Department’s arguments. But merger opponents feel they have better odds in court than in the political realm.
“Before today, the question was never on the merits of the deal—it was always whether AT&T’s political muscle could so pressure the administration that they would OK it,” said Ed Black, president of the Computer and Communications Industry Association. “That didn’t happen.”