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FCC Chairman: AT&T/T-Mobile deal not in public interest, hearing requested, reports WSJ

FCC Chairman Julius GenachowskiFederal Communications Commission Chairman Julius Genachowski will allegedly come out against the proposed AT&T acquisition of T-Mobile USA, saying that the deal is not in the public interest, reports the Wall Street Journal, citing persons close to the matter. Genachowski is reportedly asking the other four FCC commissioners to approve an administrative hearing, during which AT&T and T-Mobile would be forced to convince the panel why the merger would serve the public interest — an argument that the FCC says the wireless companies have so far failed to make.

The FCC’s resistance against the AT&T/T-Mobile merger follows a lawsuit by the Department of Justice to block the deal. If approved, the FCC hearing would not take place until the DoJ lawsuit trial, which is set to begin in February, has concluded. Both the FCC and the Justice Department must approve the $39 billion sale before it can proceed.

Following the DoJ’s suit against the merger, Genachowski said that the FCC has “serious concerns about the impact of the proposed transaction,” which could prove detrimental to customers and the wireless industry as a whole.

In a statement issued to Consumerist, AT&T senior vice president of Corporate Communications called the FCC’s actions “disappointing.” He added: “It is yet another example of a government agency acting to prevent billions in new investment and the creation of many thousands of new jobs at a time when the US economy desperately needs both. At this time, we are reviewing all options.”

The last time the FCC held an administrative hearing over a corporate merger was in 2002. The hearing reviewed the proposed merger of EchoStar and DirecTV. That deal was later abandoned.

If the AT&T/T-Mobile deal falls apart, AT&T will be forced to pay Deutche Telekom AG, the current parent company of T-Mobile, between $3 billion and $6 billion in penalties.

The FCC is expected to officially announce its plans for a hearing on the merger soon. But we can already hear the champagne glasses clinking at Sprint headquarters.

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