Thursday, September 01, 2011

Reputation Is Not Enough 

AT&T is learning that reputation is not enough to sway the government when it comes to a merger. The Justice Department sued yesterday to block its takeover of T-Mobile.  This happened in spite of the promise by AT&T to repatriate call center jobs to the US and its argument that competition in the field will prevent price increases.  The merger has been criticized since its announcement with legislators and competitors lined up against it.  AT&T has a long road now and a perilous one to see the merger through if there is any chance of doing so.  Look for concessions, plenty of them, and binding promises, and even they might not be enough.  The lesson here is that corporate reputation goes only so far.  There comes a time when regulators and others consider corporate action beyond the pale.  CEOs balance this equation regularly in their decision making.  AT&T thought it was on the right side of it.  Events may prove the company wrong.


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