1. Learning Team Reflection: Week 5 IRAC Brief 1
Week 5 IRAC Brief
Travis Bulbulian, Danielle Gomez, Rachel Krebs, Kimberly Pena, Shaneque Walters
25 November 2013
LAW/531
David Walker

2. Learning Team Reflection: Week 5 IRAC Brief 2
Week 5 IRAC Brief
Introduction
Antitrust law grew out of America's success during the Industrial Revolution and the rise
of monopolistic business practices that dominated their respective industries and wiped out most
(if not all) competition (Read, 1960). In a capitalistic economy, competition within a free-market
is necessary to help the economy thrive. When monopolies are formed and competition is
eliminated, wealth and power are too concentrated leading to economic disparity (Read, 1960).
AT&T's attempt to gain approval from the Federal Communications Commission and the Justice
Department to purchase the cell phone service provider T-Mobile is an issue of antitrust law
because if AT&T gains T-Mobile there will be less competition in the cell phone provider
market. The case is examined, governance principles of regulatory compliance requirements are
explored, and methods for managing legal risk rising from regulatory compliance issues are
investigated in order to shed light on this case and the issue of antitrust legislation.
IRAC
CASE: AT&T is working to gain the trust and approval of the Federal Communications
Commission and the Justice Department for the purchase of T-Mobile; a $39 billion purchase
expected to offer cost savings of approximately $40 billion.
ISSUE: The main concern is that this will not neglect any antitrust regulations and that AT&T
will not take over too much of the market. According to Davidoff (2013), there are 18 out of 20
markets currently that have five wireless carriers that offer service. The purchase and merger

3. Learning Team Reflection: Week 5 IRAC Brief 3
with T-Mobile will decrease this to three. The question at hand asks who will assume the risk of
antitrust failure. If regulatory compliance is not cleared AT&T is required to pay Deutsch
Telekom a reverse termination fee of $3 billion. In terms of acquisitions, there are particular
divestitures must be made and pre-specified to avoid any antitrust risk. According to
Investopedia (2013) divestiture is the removal of company assets from the books and the sale of
ownership stakes.
RULE: The terms of the acquisition must not neglect any terms found in the Sherman Act,
Clayton Act, or the Federal Trade Commission Act which regulate monopolistic, regulates
mergers, and prohibits unfair competition methods. The question is whether or not the
acquisition of T-Mobile violates Section 1 of the Sherman Act: anticompetitive restraints, the
competitive structure of the industry, duration, and firms market share and power. If any of these
are questions of concern or violations of federal regulations, then the Per Se Rule becomes
applicable and case is automatically in violation (Cheeseman, 2013, pg. 768).
ANALYSIS: In a situation such as this, a business judgment rule would come into effect to
protect the directors from a potential decision that could end up costing AT&T $3 billion in fees,
not to mention still require them to meet pre-acquisition agreements. Within this deal is a variety
of risk that is based on allocation. AT&T assuming that their stock prices will fluctuate in their
favor is selling shares. JPMorgan is lending money to AT&T to complete the transaction, and
Deutsch Telekom is expecting to capture the value in the increasing stock issued by AT&T. All
of this is further based on the assumption that the deal with go through. The primary question

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however is if AT&T will obtain approval of the Federal Communications Commission and the
Justice Department.
Governance Principles of Regulatory Compliance Requirements
Governance principles and regulation are designed to protect employees and the public
from unsafe and abusive practices by businesses. Many times when a regulatory statute is
enacted, an administrative agency is created to enforce the law (Cheeseman, 2013). The
government is ultimately responsible for overseeing a business’ performance. So, the business
must comply with all state and federal laws. In order to be in regulatory compliance, each
employer must utilize best practices effectively. Specific government regulation consists of laws
that regulate specific industries. For instance, if an industry has minors working for them, they
must abide by all state rules to be in compliance with the law. Another example would be the
Occupational Safety and Health Administration (OSHA), who is authorized to regulate
workplace safety therefore all businesses must be in compliance. According to the OSHA
website, standards in this part requiring training on hazards and related matters, such as standards
requiring that employees receive training or that the employer train employees, provide training
to employees, or institute or implement a training program, impose a separate compliance duty
with respect to each employee covered by the requirement. Therefore the employer is responsible
for effectively training the employee required by OSHA standards.
Another governance principles specifically for the current article about AT&T would be
The Electronic Communications Privacy Act ("ECPA") which was passed in 1986 to expand and
revise federal wiretapping and electronic eavesdropping provisions. According to Epic.org, it
was envisioned to create "a fair balance between the privacy expectations of citizens and the

5. Learning Team Reflection: Week 5 IRAC Brief 5
legitimate needs of law enforcement." Congress also sought to support the creation of new
technologies by assuring consumers that their personal information would remain safe.
In order to maintain compliancy, the management team should complete an internal audit. An
internal audit would have to be conducted on a consistent, honest basis. Any issues should be
corrected in a timely manner to ensure compliance. The management team follow up with all
audits to see the areas of opportunity and celebrate consistent successes to ensure 100%
compliance with all regulatory compliance requirements.
Methods for Managing Legal Risk Rising from Regulatory Compliance Issues
There are various methods that an organization can use to manage risk from regulatory
compliance issues are to understand what potential issues they face. Management must
understand the full set of risks they are exposed to now, and any future regulatory risks that can
be brought on due to upcoming regulatory changes. Large organizations that have an in-house
compliance department should be audited to determine their effectiveness in reviewing
regulations. Some companies will hire independent audit firms for an assessment and assistance
in developing a risk-based compliance control framework and monitoring program (Pwc, 2013).
These firms can make sure that a company will know where they stand, and what they need to
work on to protect the business whether it is from a loss to a competitor or their reputation from
failing to comply with regulators. One tool that a company already has can be used to manage
legal risk is to use their Information Technology Department.
With the enacting of the Sarbanes-Oxley Act, organizations are now realizing the
importance of governance, risk management, and compliance (GRC). In order for an
organization to gain the most from the controls they implement, management must combine

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GRC to decrease risk exposure or duplicative processes (Anand, 2010). Companies can leverage
the effort and costs associated with Sarbanes-Oxley compliance and move towards integrated
GRC. Information technology (IT) can be used to automate an organization’s current control
process and create additional processes at other levels of the organization. By doing so, IT can be
positioned to support organizational goals and play an active role in the business strategy.
Management can also use IT to measure their success when they meet their short-term and long-
term goals.
Relevant Graphs

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Conclusion
It is evident that a lot of different factors were considered when AT&T decided to try and
purchase T-Mobile. Due to antitrust legislation, AT&T had to seek permission to purchase
T-Mobile from the Federal Communications Commission and the Justice Department because of
the federal government's concern over the formation of monopolies (Cheeseman, 2013). Other
factors that needed considered were of course the pros and cons of the acquisition, if any laws
were being or would be violated by the purchase, and finding the best ways to manage legal risk
when it comes to business acquisitions.

9. Learning Team Reflection: Week 5 IRAC Brief 9
References
Anand, S. (2010). Technology and the Integration of Governance, Risk
Management and Compliance. Financial Executive, 26(10), 57-58.
Cheeseman, H.R. (2013). Business law: Legal environment, online commerce, business ethics,
and international issues (8th ed.). Upper Saddle River, NJ: Prentice Hall.
Davidoff, S. M. (2013). The Regulatory Risk in the AT&T Deal. Retrieved from
http://dealbook.nytimes.com/2011/03/21/the-regulatory-risk-in-the-att-deal/?_r=0
Divestiture. (2013). Retrieved from http://www.investopedia.com/terms/d/divestiture.asp
Electronic Privacy Information Center (2013, April 25). ECPA. EPIC.org. Retrieved Nov 23,
2013, from http://www.EPIC.org
Occupational Safety and Health Administration (2013, July 15). OSHA LAW &
REGULATIONS. OSHA.gov. Retrieved Nov 23, 2013, from http://www.OSHA.gov
Pwc.com (2013). Risk and regulatory compliance. Retrieved November 24, 2013,
From http://www.pwc.be/en/risk-regulatory-compliance/index.jhtml
Read, L. E. (1960, September 1). Good and Bad Monopoly. : The Freeman : Foundation for
Economic Education. Retrieved November 25, 2013, from
http://www.fee.org/the_freeman/detail/good-and-bad-monopoly#axzz2liQKdOvK

10. Learning Team Reflection: Week 5 IRAC Brief 9
References
Anand, S. (2010). Technology and the Integration of Governance, Risk
Management and Compliance. Financial Executive, 26(10), 57-58.
Cheeseman, H.R. (2013). Business law: Legal environment, online commerce, business ethics,
and international issues (8th ed.). Upper Saddle River, NJ: Prentice Hall.
Davidoff, S. M. (2013). The Regulatory Risk in the AT&T Deal. Retrieved from
http://dealbook.nytimes.com/2011/03/21/the-regulatory-risk-in-the-att-deal/?_r=0
Divestiture. (2013). Retrieved from http://www.investopedia.com/terms/d/divestiture.asp
Electronic Privacy Information Center (2013, April 25). ECPA. EPIC.org. Retrieved Nov 23,
2013, from http://www.EPIC.org
Occupational Safety and Health Administration (2013, July 15). OSHA LAW &
REGULATIONS. OSHA.gov. Retrieved Nov 23, 2013, from http://www.OSHA.gov
Pwc.com (2013). Risk and regulatory compliance. Retrieved November 24, 2013,
From http://www.pwc.be/en/risk-regulatory-compliance/index.jhtml
Read, L. E. (1960, September 1). Good and Bad Monopoly. : The Freeman : Foundation for
Economic Education. Retrieved November 25, 2013, from
http://www.fee.org/the_freeman/detail/good-and-bad-monopoly#axzz2liQKdOvK