Blindsided and Besieged, AT&T's Lawyer Fights On

AT&T's big bet that it could persuade the government to clear its proposed $39 billion acquisition of competitor T-Mobile USA was dealt a sharp setback Aug. 31, when the Justice Department sued to block it. It was the first time the government had gone to court to stop a deal by the new AT&T, or its predecessor SBC, on antitrust grounds. That leaves AT&T General Counsel Wayne Watts with the daunting task of simultaneously trying to fight and negotiate with the Justice Department. Watts, who has headed off threats to more than $220 billion worth of merger transactions done by his bosses, didn't see this lawsuit coming. In fact, when AT&T officials left a meeting with the Justice Department in late August, they felt it was signaling the deal was on track and all that was left was to negotiate some modest divestitures to allay its concerns. AT&T's lobbyists had rounded up lots of support for the deal from members of Congress, state officials and various interest groups. Yet despite its many years of experience, Watts's legal team deeply misjudged the Justice Department's likely reaction.