SAN FRANCISCO—The U.S. Justice Dept. Wednesday (Aug. 31) filed a civil antitrust lawsuit in an attempt to block AT&T Inc.'s proposed $39 billion acquisition of T-Mobile USA Inc., saying the deal would decrease competition for wireless communication services.
The DoJ's lawsuit, filed in U.S. District Court for the District of Columbia, seeks to prevent AT&T from acquiring T-Mobile from Deutsche Telekom AG.
"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 M. Cole, in a statement. "Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition."
According to the DoJ, AT&T, T-Mobile, Sprint and Verizon provide service to more than 90 percent of the more than 300 million connected wireless devices currently in use in the U.S. The acquisition of T-Mobile would consolidate two of those four and remove a firm, T-Mobile, that historically has been a value provider, offering particularly aggressive pricing, according to the DoJ.
The DoJ's complaint alleges that AT&T and T-Mobile compete head to head nationwide, including in 97 of the nation’s largest 100 cellular marketing areas. They also compete nationwide to attract business and government customers, according to the complaint. AT&T’s acquisition of T-Mobile would eliminate a company that has been a disruptive force through low pricing and innovation by competing aggressively in the mobile wireless telecommunications services marketplace, the DoJ said.
Wayne Watts, AT&T senior executive vice president and general counsel, said through a statement that AT&T was "surprised and disappointed" by the suit, particularly since the DoJ gave the company no indication that it was considering filing the complaint.
"We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed," Watts said. "The DoJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court."
Watts said the proposed acquisition would help solve the exhaustion of wireless spectrum in the U.S. and improve wireless service for millions of people. The proposed acquisition would also allow AT&T to expand 4G LTW broadband service to another 55 million Americans and result in billions of dollars in investment and tens of thousands of jobs "at a time when our nation needs them."
AT&T wouldn't be the only mobile service provider if the merging was allowed. Why would the merging result in "higher prices, fewer choices and lower quality products for mobile wireless services"?
On the other hands, if the merging is allowed, AT&T will get a larger spectrum. The likelihood that AT&T improves their service will be higher. In addition, due to the regional coverage difference, AT&T coverage area will likely improve and increase. The result is AT&T will be able to compete better with Verizon. I am keen to the merging. One of the biggest concerns I have is whether the merging will affect the job market.
Tmobile and Sprint have traded back and forth between "best pricing" for US consumers. I have historically flopped back and forth between the two. I am happy that this is being blocked and I agree with the reasons. On the other hand, is it true that AT&T will have to pay DT and Tmobile $3B bucks if it doesn't go through? DT has better negotiators than AT&T, I guess.
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