Sprint Lawsuit to Proceed, Partially
Nov 3rd 2011 12:42PM
Updated Nov 3rd 2011 1:20PM
Like most things regarding Sprint Nextel (NYS: S) , the very latest event affecting the company has a "good news/bad news" component. The good: A federal judge held up part of Sprint's right to challenge in court AT&T's (NYS: T) proposed acquisition of T-Mobile USA. The bad: The judge held up only part of Sprint's challenge.
What the judge let stand was Sprint's ability to proceed with its allegation that a post-merger AT&T and Verizon (NYS: VZ) would be able to make it more difficult for carriers with less clout to compete for the most desirable mobile devices.
But dismissed from the lawsuit was Sprint's claim that those carriers would then be able to increase its roaming and infrastructure services costs. Although the judge said Sprint's argument was not sufficiently supported, injury claims from C Spire Wireless -- another carrier suing to halt the merger -- that it would be affected by roaming services were allowed to proceed.
Also thrown out was Sprint's claim that it would be hurt in the marketplace for wireless spectrum if the merger went through.
Both sides, of course, claimed victory.
A statement from Sprint: "We are pleased that the court has given us the chance to continue fighting to preserve competition on behalf of consumers and the wireless industry."
AT&T's reaction: "We are pleased with the ruling that dismisses the vast majority of the claims of Sprint and CellSouth [C Spire]. We believe the limited, minor claims they have left are entirely without merit."
But Sprint's partial victory here also gives it the likely ability to obtain AT&T legal documents it otherwise could not have had access to if all claims were thrown out. And it will try to help out the Justice Department with its antitrust lawsuit trying to stop the merger.
Is this a glass half-full, or a glass half-empty ruling? You be the judge.
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At the time this article was published Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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