SAN FRANCISCO – The Justice Department's rejection of AT&T's proposed purchase of T-Mobile USA will test new federal guidelines on challenging mergers and the companies' resolve in forming the nation's largest wireless carrier.

A courtroom battle is likely and could wring out information that the companies would prefer to keep private. Still, AT&T Inc. has a big incentive to fight: If the deal is called off, the company has to pay a $3 billion breakup fee and surrender some of its unused spectrum for wireless communications.

AT&T is promising to fight the Justice Department's decision. The department filed a lawsuit Wednesday to block the $39 billion deal, saying it would reduce competition and lead to price increases for customers.

If AT&T follows through on that, it could produce the biggest antitrust showdown since business software maker Oracle Corp. squared off with the federal government seven years ago. That dispute, triggered by the government's decision to block Oracle's proposed purchase of rival PeopleSoft Inc., exposed several well-kept corporate secrets and required Oracle CEO Larry Ellison to testify before a packed courtroom.

In the end, Oracle pulled off something few companies have done in the past 30 years: It persuaded a federal judge that the Justice Department didn't have grounds to block its PeopleSoft deal. Oracle closed its $11.1 billion takeover four months after getting the favorable court ruling.

Usually, not even the most powerful companies bother to fight government regulators in an antitrust dispute. Google Inc., for example, backed off in 2008 when the Justice Department threatened to sue to block a proposed Internet search partnership with Yahoo Inc. Microsoft Corp., the world's largest software maker, pulled out of a deal to buy Intuit Corp. in 1995 after the Justice Department objected.

The Justice Department filed 138 antitrust cases in federal courts from 1999 to 2008 and lost just four of them, according to the latest breakdown from the agency.

One reason that the Justice Department has such a good track record is because it rarely challenges a deal unless it's very confident it can win, said Joseph Bauer, a University of Notre Dame law professor and antitrust expert.

Knowing AT&T would probably go to court, the Justice Department may have wanted to signal that it intends to get tougher on corporate marriages between rivals in markets with few other competitors.

A union between AT&T and T-Mobile USA would leave Verizon and Sprint as the only other major cellphone carriers in the U.S. T-Mobile, a subsidiary of German telecom company Deutsche Telekom AG, is currently the No. 4 wireless carrier, while AT&T is second. Combined, AT&T would be the largest.

In a sign of its confidence, the Justice Department decided to strike down the deal even though it could have taken about three more months to study the pros and cons. The timing stunned AT&T, which said it didn't get any advance warning.

"It was an aggressive and impressive move by the DOJ to take the battle right at AT&T," said Daniel Wall, a San Francisco attorney who represented Oracle in its 2004 fight to win the right to buy PeopleSoft. "It sent a statement that the DOJ intends to fight this one all the way to the finish line."

Wall said AT&T may have a tougher time proving its case than Oracle did against the Justice Department. In the PeopleSoft deal, Wall said, antitrust enforcers seemed to be manipulating the definition of the business software market. "This time, it looks to me that they have a pretty solid market definition," Wall said. "They don't appear to be playing games."

University of Iowa law professor Herbert Hovenkamp said the Justice Department is being guided by a set of new guidelines, issued late last year, which make it clearer when mergers should be challenged on antitrust grounds.

"I don't think they are overreaching here," Hovenkamp said. "If there is a broader message here, it's that the government intends to enforce these new guidelines."

Besides being forced to divulge potentially damaging information, AT&T will face other risks if it doesn't settle with the Justice Department. Going to trial will take months, or even years, leaving the company in a legal limbo that could depress its stock price and cause customers and key employees to defect.

There's another risk to going to trial: as they try to prove their case, antitrust lawyers sometimes obtain confidential e-mails that contain embarrassing snippets and present other evidence that can make companies look bad.

Those are some of the reasons why AT&T mayl try to reach some kind of settlement with the government.

If AT&T persists, antitrust experts said that it's better off going up against the Justice Department than the Federal Trade Commission, which also handles antitrust reviews. That's mainly because lawsuits with the Justice Department are contested in federal courts. By contrast, the threshold for the FTC to block deals is generally lower, and the ensuing legal skirmishes occur in administrative law proceedings that drag on longer.

"The merging parties usually have a better shot when they are going up against the DOJ than the FTC," said D. Daniel Sokol, a University of Florida professor specializing in antitrust law.

By Poornima Gupta

SAN FRANCISCO |
Tue Aug 16, 2011 6:56pm EDT

SAN FRANCISCO – An illegal, Orwellian violation of free-speech rights? Or just a smart tactic to protect train passengers from rowdy would-be demonstrators during a busy evening commute?

The question resonated Saturday in San Francisco and beyond as details emerged of Bay Area Rapid Transit officials' decision to cut off underground cellphone service for a few hours at several stations Thursday. Commuters at stations from downtown to near the city's main airport were affected as BART officials sought to tactically thwart a planned protest over the recent fatal shooting of a 45-year-old man by transit police.

Two days later, the move had civil rights and legal experts questioning the agency's move, and drew backlash from one transit board member who was taken aback by the decision.

"I'm just shocked that they didn't think about the implications of this. We really don't have the right to be this type of censor," said Lynette Sweet, who serves on BART's board of directors. "In my opinion, we've let the actions of a few people affect everybody. And that's not fair."

Similar questions of censorship have arisen in recent days as Britain's government put the idea of curbing social media services on the table in response to several nights of widespread looting and violence in London and other English cities. Police claim that young criminals used Twitter and Blackberry instant messages to coordinate looting sprees in riots.

Prime Minister David Cameron said that the government, spy agencies and the communications industry are looking at whether there should be limits on the use of social media sites like Twitter and Facebook or services like BlackBerry Messenger to spread disorder. The suggestions have met with outrage — with some critics comparing Cameron to the despots ousted during the Arab Spring.

In the San Francisco instance, Sweet said BART board members were told by the agency of its decision during the closed portion of its meeting Thursday afternoon, less than three hours before the protest was scheduled to start.

"It was almost like an afterthought," Sweet told The Associated Press. "This is a land of free speech and for us to think we can do that shows we've grown well beyond the business of what we're supposed to be doing and that's providing transportation. Not censorship."

But there are nuances to consider, including under what conditions, if any, an agency like BART can act to deny the public access to a form of communication — and essentially decide that a perceived threat to public safety trumps free speech.

These situations are largely new ones, of course. A couple of decades ago, during the fax-machine and pay-phone era, the notion of people organizing mass gatherings in real time on wireless devices would have been fantasy.

BART Deputy Police Chief Benson Fairow said the issue boiled down to the public's well-being.

"It wasn't a decision made lightly. This wasn't about free speech. It was about safety," Fairow told KTVU-TV on Friday.

BART spokesman Jim Allison maintained that the cellphone disruptions were legal as the agency owns the property and infrastructure. He added while they didn't need the permission of cellphone carriers to temporarily cut service, they notified them as a courtesy.

The decision was made after agency officials saw details about the protest on an organizer's website. He said the agency had extra staff and officers aboard trains during that time for anybody who wanted to report an emergency, as well as courtesy phones on station platforms.

"I think the entire argument is that some people think it created an unsafe situation is faulty logic," Allison said. "BART had operated for 35 years without cellphone service and no one ever suggested back then that a lack of it made it difficult to report emergencies and we had the same infrastructure in place."

But as in London, BART's tactic drew immediate comparisons to authoritarianism, including acts by the former president of Egypt to squelch protests demanding an end to his rule. Authorities there cut Internet and cellphone services in the country for days earlier this year. He left office shortly thereafter.

"BART officials are showing themselves to be of a mind with the former president of Egypt, Hosni Mubarak," the Electronic Frontier Foundation said on its website. Echoing that comparison, vigorous weekend discussion on Twitter was labeled with the hashtag "muBARTek."

Aaron Caplan, a professor at Loyola Law School in Los Angeles who specializes in free-speech issues, was equally critical, saying BART clearly violated the rights of demonstrators and other passengers.

"We can arrest and prosecute people for the crimes they commit," he said. "You are not allowed to shut down people's cellphones and prevent them from speaking because you think they might commit a crime in the future."

Michael Risher, the American Civil Liberty Union's Northern California staff attorney, echoed the sentiment in a blog: "The government shouldn't be in the business of cutting off the free flow of information. Shutting down access to mobile phones is the wrong response to political protests, whether it's halfway around the world or right here in San Francisco."

On Saturday at a station where cell phone service was disrupted, passenger Phil Eager, 44, shared the opinion that BART's approach seemed exaggerated.

"It struck me as pretty strange and kind of extreme," said Eager, a San Francisco attorney. "It's not a First Amendment debate, but rather a civil liberties issue."

Eager said many of his friends riding BART on Thursday were upset with the agency's actions, some even calling it a "police state."

Mark Malmberg, 58, of Orinda, Calif., believes that BART could've used a different approach instead of shutting down cellphone usage.

"Even though it sounds like they wanted to avoid a mob gathering, you can't stop people from expressing themselves," Malmberg said. "I hope those who protest can do so in a civil manner."

The ACLU already has a scheduled meeting with BART's police chief on Monday about other issues and Thursday's incident will added be to the agenda, spokeswoman Rebecca Farmer said.

But others said that while the phone shutdown was worth examining, it may not have impinged on First Amendment rights. Gene Policinski, executive director of the First Amendment Center, a nonprofit educational organization, said freedom of expression can be limited in very narrow circumstances if there is an immediate threat to public safety.

"An agency like BART has to be held to a very high standard," he said. "First of all, it has to be an immediate threat, not just the mere supposition that there might be one. And I think the response has to be what a court would consider reasonable, so it has to be the minimum amount of restraint on free expression."

He said if BART's actions are challenged, a court may look more favorably on what it did if expression was limited on a narrow basis for a specific area and time frame, instead of "just indiscriminately closing down cellphone service throughout the system or for a broad area."

University of Michigan law professor Len Niehoff, who specializes in First Amendment and media law issues, found the BART actions troublesome for a few reasons.

He said the First Amendment generally doesn't allow the government to restrict free speech because somebody might do something illegal or to prohibit conversations based on their subject matter. He said the BART actions have been portrayed as an effort to prevent a protest that would have violated the law, but there was no guarantee that would have happened.

"What it really did is it prevented people from talking, discussing ... and mobilizing in any form, peaceful or unpeaceful, lawful or unlawful," he said. "That is, constitutionally, very problematic."

The government does have the right to break up a demonstration if it forms in an area where protests are prohibited and poses a risk to public safety, Niehoff said. But it should not prohibit free speech to prevent the possibility of a protest happening.

"The idea that we're going to keep people from talking about what they might or might not do, based on the idea that they might all agree to violate the law, is positively Orwellian," he said.

___

Associated Press reporters Tom Murphy in Indianapolis; Gene Johnson in Seattle; Jonathan Cooper in Portland, Ore.; and Cassandra Vinograd and David Stringer in London contributed.

BAODING, China – Solar panels jut out of streetlights in China's self-proclaimed Clean Energy City. Tiny wind turbines twirl atop public buildings. Schools are due to teach students about "green living."

In the scramble to profit from demand for clean energy, this city southwest of Beijing is promoting itself as a manufacturing center for solar, wind and other gear by transforming into a living showcase of environmental technology.

"Baoding is following a path of ecological civilization," a deputy mayor, Zhou Xingshi, told a group of visiting reporters.

Baoding illustrates the intensity of Chinese government efforts to profit from rising global demand for clean energy. Communist leaders are promoting solar, wind and hydropower to curb surging demand for imported oil and gas and see technology exports as a route to cleaner growth and higher-paid jobs.

Chinese utility companies are required to install wind turbines and Beijing has promised to pay part of the cost of solar equipment — a strategy that is driving the rapid growth of Baoding and other supply centers.

China led the world in clean energy investment last year at $54.4 billion, up 39 percent from 2009, according to a March report by the Pew Charitable Trust. Worldwide, investment rose 30 percent to $243 billion.

Baoding, 90 miles (150 kilometers) from the Chinese capital in the table-flat farmland of Hebei province, started billing itself as a renewable energy center in 2002 after the success of Yingli Green Energy Co., a local startup founded in 1987 that grew into a major supplier of solar panels. City leaders officially declared Baoding a "Clean Energy City" in 2006.

Today, Baoding has two government research labs and 170 companies that produce clean power equipment. They include Zhonghang Huiteng Windpower Equipment Co., one of the biggest makers of wind turbine blades. Other fields targeted by Baoding for development include batteries and power transmission.

Baoding's clean energy companies had 45 billion yuan ($7 billion) in revenue last year, according to the city government. It says the local industry should grow by 30 percent a year through 2016.

Local authorities work closely with companies, organizing job fairs, providing training and helping to recruit employees through local schools.

Companies also are attracted by Baoding's "funding resources," said Lian Shujun, deputy director of the Baoding National New and High-Tech Industrial Development Zone.

Lian gave no details but Chinese companies in favored industries can receive government support ranging from tax breaks and low-interest loans to free rent in business parks.

Such support has prompted complaints by Beijing's trading partners that the government is improperly subsidizing Chinese companies and hampering market access. The U.S. government said this month Beijing agreed to rescind some policies that American officials said amounted to subsidies to makers of wind turbines.

China already is the world's biggest producer of solar and wind equipment. Yingli and other Chinese solar suppliers have long competed in global markets because their equipment was too expensive for domestic use. Chinese makers of wind gear are only starting to expand abroad but some domestic producers already are among the world's biggest due to their vast home market.

The Chinese government says it wants at least 15 percent of the country's power to come from renewable sources by 2020. It is spending heavily on grants and other aid to propel technology development.

"The Chinese government is very supportive of the green market," said Liansheng Miao, Yingli's founder and chairman.

In a sign of high-level endorsement, Yingli received a 36 billion yuan ($5.5 billion) line of credit last year from state-owned China Development Bank.

Miao rejected what he said was the notion that Yingli, a private company with shares traded on the New York Stock Exchange, succeeds due to government support.

"I am an entrepreneur, not a state-owned entity, so the government would not help me," he said at a news conference. "What we compete on is our innovation and cost structure."

Yingli's CFO, Li Zongwei, said it has yet to receive any money from the China Development Bank and will have to submit individual projects to obtain loans. Li said such projects are conducted on "commercial terms."

Other companies in Baoding say business is booming.

A wind turbine factory owned by China Guodian Corp., one of China's biggest power generators, expects to sell 1,100 units this year, nearly double 2009's level of 600, said the factory's deputy general manager, Wang Hongbin.

Wang said all of his factory's output of 1.5-megawatt turbines was sold in China, but Guodian also has announced plans to expand to the United States by supplying units for a power project in Corpus Christi, Texas.

"Production definitely will increase," Wang said, standing beside rows of 130-foot-long (40-meter-long) turbine blades in wooden cradles outside the factory, awaiting delivery to power companies.

Other city government efforts to promote clean energy include installing 110 solar-powered traffic lights, according to Lian, the industrial zone official. New buildings are required to use solar-powered water heaters.

Baoding's city government launched a joint effort with the environmental group WWF in 2008 to share information on city planning and technology and to develop environmental education programs.

"All citizens in Baoding will be taught about `green living'," he said, "starting with elementary school students."