U.S. Justice Dept. moves to block AT&T, T-Mobile merger

The U.S. government has officially filed suit to block AT&T's proposed $39 billion acquisition of T-Mobile.

The U.S. government on Wednesday officially filed suit to block AT&T's proposed $39 billion acquisition of T-Mobile.

The reason? The acquisition of America's fourth-largest carrier by its second-largest would "substantially lessen competition" in the industry, violating U.S. antitrust law.

"The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said deputy attorney general James Cole in a statement.

More points made in the filing:

  • The four major national wireless carriers -- AT&T, T-Mobile, Sprint and Verizon -- account for more than 90 percent of the market.
  • AT&T and T-Mobile compete head-to-head nationwide, in 97 of the America's 100 largest cellular marketing areas.
  • T-Mobile's small size allowed it to innovate with Android, HSPA+, national Wi-Fi "hotspot" access and unlimited service plans. That and its value pricing are at risk when joined with AT&T.
  • There's no one to fill T-Mobile's role. "Regional providers face significant competitive limitations, largely stemming from their lack of national networks, and are therefore limited in their ability to compete with the four national carriers," the DOJ said.

The U.S. Department of Justice filed its complaint in federal court in Washington, seeking a court order to block the deal. It's officially U.S. v. AT&T Inc., 11-01560, U.S. District Court for the District of Columbia, though documentation is not yet accessible online now available here, as a .PDF. Or, read it below:

DOJ ATT TMo Complaint 083111

Should it succeed, AT&T would be forced to pay Deutsche Telekom, T-Mobile's German parent company, $3 billion in cash, as well as additional wireless spectrum and reduced charges for calls using AT&T's network.

"Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer," said Sharis Pozen, acting assistant attorney general for the DOJ's Antitrust Division, in a statement.

UPDATE: Cole and Pozen also held a press conference about the complaint.

One point from each of their presentations:

  • Cole: "[We] will remain steadfast in its mission to vigorously enforce the antitrust laws."
  • Pozen: "It is important to move expeditiously to preserve the lower prices and innovation resulting from T-Mobile’s competitive presence in this market."

The news comes after AT&T claimed that the deal would add 5,000 new jobs in the U.S. The final decision is expected early next year.

Photo Illustration: Andrew Nusca

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