Justice Department sues to block AT&T/T-Mobile merger

The proposed merger between AT&T and T-Mobile has hit a major roadblock. CNN reports that the US government's Justice Department has filed a lawsuit today against the merger, claiming that it would violate current anti-trust laws. The government claims in the lawsuit, filed in a Washington DC federal court, that, "AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market." In a press conference, deputy Attorney General James Cole said, "We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services."

AT&T, the nation's largest wireless phone carrier, first announced its proposed merger deal with T-Mobile, the nation's fourth largest wireless carrier, a number of months ago for a whopping $39 billion price tag. At the time AT&T said that the deal was needed in part to expand the company's 4G network across the US. However a recently leaked document showed that AT&T could expand their 4G network on their own for much less than what the T-Mobile merger will cost them. That caused some people to speculate that AT&T's real motives were to eliminate competition.

In a statement sent to AllThingsD.com, AT&T's general counsel Wayne Watts said that the company was "surprised and disappointed" by the Justice Department's lawsuit, adding, "We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court." Shares of AT&T went down 5 percent in trading today after the news of the lawsuit was announced. Sprint, the nation's third largest wireless carrier, saw its share price spike over 5 percent on the news.

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18 Comments

What usually happens in situations like this is the DoJ will present a list of things that AT&T/T-Mobile will have to compromise on before the deal can go through.

It might involve things like providing subsidized phone service to rural areas, spinning off certain geographic regions to regional service providers, giving up certain technologies...etc.

There is no way a GSM monopoly can be good for consumers in any way. Show me a situation where less competition produces anything but higher prices and less/slower innovation.

Bravo DOJ!! You actually got it right this time. This merger is a horrible idea that would only hurt competition and all U.S. subscribers in the end. I'm glad to hear this. The last thing we need is the worst provider (in my opinion) in this country to be growing even larger while knocking out a competitor in the process. It's no secret that AT&T service has been horrible.Maybe they should take those billions of dollars and re-invest in their infrastructure to bring the service levels and quality up to a decent standard especially for those people in rural areas and heavily populated metropolitan areas like New York & Chicago.

Hum i guess Oracle buying Sun did promote competition ....

I guess justice is not that same for everybody ... they probably did not pay enough or did not pay the right ones.

Who's Sun? LOL

LaP said,
Hum i guess Oracle buying Sun did promote competition ....

I guess justice is not that same for everybody ... they probably did not pay enough or did not pay the right ones.

Thank God someone in the government is stepping up and doing their job.

The customer benefits may exist at first in the form of better coverage for T-Mobile users and faster coverage for some AT&T users with 4G phones in 4G areas previous covered by T-Mobile. But this benefit would be very temporary. The long term effects are exactly what the DoJ claim, less competition, higher prices, and less innovation.

Shadrack said,
Thank God someone in the government is stepping up and doing their job.

The customer benefits may exist at first in the form of better coverage for T-Mobile users and faster coverage for some AT&T users with 4G phones in 4G areas previous covered by T-Mobile. But this benefit would be very temporary. The long term effects are exactly what the DoJ claim, less competition, higher prices, and less innovation.

There's one problem with that - unless someone with deep pockets and not connected with telecom in any way steps up, then T-Mobile will go away. Net result would be as if they were acquired.
I have no real dog in this - I'm a VZW fan and former customer, and I have no love whatever for AT&T Mobility; still, Deutsch Telekom (the German parent of T-Mobile USA) wants out of the US wireless market to concentrate more on the EU. VZW is bigger than even AT&T Mobility, therefore, I can't see the DoJ approving a VZW/T-Mobile merger, either. Sprint doesn't have the money, so what's left? Or are you thinking of some sort of forced partitioning of T-Mobile's assets and spectrum? (There is, quite literally, no precedent legally for that - do you really want to open up that shipping-container full of worms?)

Shadrack said,
Thank God someone in the government is stepping up and doing their job.

The customer benefits may exist at first in the form of better coverage for T-Mobile users and faster coverage for some AT&T users with 4G phones in 4G areas previous covered by T-Mobile. But this benefit would be very temporary. The long term effects are exactly what the DoJ claim, less competition, higher prices, and less innovation.

Well, I think the obvious counter point is that T-Mobile doesn't want to be in the US anymore. So, if they don't merge with AT&T and get good value for their shareholders, they will probably just liquidate and AT&T is going to buy up their assets anyway, but at a lower price.

negroplasty said,
I have a little more faith in this country after reading this.

You're kidding me, right?

It was AT&T's lawyers that screwed this deal up by "leaking" those documents that have been posted all over the internet.

The government only looks out for #1 (meaning themselves) but didn't want to look like total dicks by letting this deal go through after AT&T's blatant ignorance/arrogance!

Thank You DOJ!!! AT&T is effing enough of us with their crappy coverage/service. Don't let them scr_w over those t-mobile customers too!

T-Mobile is going to get a huge amount of monies either way so T-Mobile is sitting pretty. No, I still think that T-mobile should buy out AT&T. Look at all the commercials appearing from no where since the announcement of the merger. Telecoms in America are scrambling up to get their new and prospective customers. This is what free open marketing means or is it just for the selected few? GSM is a worldwide standard and America should just join the family. AT&T would not sign an agreement of this magnitude unless they have things in the works or the upper management of AT&T just do not know what they are doing anymore. This could end being a huge trial I think if things are put in order. Do not think that Deutsch Telekom is that ignorant. Words are just words but actions speak loader than words.

From the article:
"Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most. "

They have already sent out over 20,000 termination notices to employess...easy to create tens of thousands of jobs when you are just re-hiring for the old positions at a lower pay rate...

I'm glad they blocked this. It would lead to higher prices, guaranteed. Yet you wouldn't know that by the talking heads on the CNBC stock channel.

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