Justice Department Looks to Block T-Mobile-AT&T Deal

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Updated at 11:53am Eastern with Justice Department press release and statement from AT&T…

The Justice Department has filed an antitrust complaint against AT&T in the hopes of preventing the $39 million T-Mobile-AT&T merger proposed earlier this year.

The filing states that, “AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market” and “substantially lessen competition,” as reported by Bloomberg.

(MORE: What the AT&T & T-Mobile Acquisition Means for Everyone)

The initial merger documentation filed back in April found the rationale behind the acquisition of T-Mobile to be because AT&T, in its own words, “faces network spectrum and capacity constraints more severe than those of any other wireless provider, and this merger provides by far the surest, fastest, and most efficient solution to that challenge.”

Perhaps anticipating the Justice Department’s filing, AT&T recently announced that the acquisition of T-Mobile would bring some 5,000 jobs back to the U.S. that had been “outsourced abroad,” according to the New York Times. T-Mobile is the nation’s fourth-largest wireless provider.

AT&T, of course, has been staunchly defending the merger, while the nation’s third-largest wireless carrier, Sprint, has been a vocal opponent of the deal, saying that it “would reverse nearly three decades of actions by the U.S. government and the courts that modernized and opened U.S. communications markets to competition.”

A report from back in May posited that should the deal fall through, T-Mobile could stand to walk away with up to $6 billion as part of a “break up fee,” although that figure now reportedly hovers closer to $7 billion.

(MORE: T-Mobile May Pocket $6 Billion if AT&T Merger Falls Through)

The Justice Department’s full press release can be found on the next page of this article. The lawsuit claims that such a merger would result “in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives.”

The release goes on to say that competition would suffer, pointing out that T-Mobile is “a firm that historically has been a value provider, offering particularly aggressive pricing,” and that “AT&T and T-Mobile compete head to head nationwide, including in 97 of the nation’s largest 100 cellular marketing areas.”

In a statement sent to Techland, AT&T’s Senior Executive Vice President and General Counsel, Wayne Watts, says:

“We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.

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.

At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will:

· Help solve our nation’s spectrum exhaust situation and improve wireless service for millions.

· Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population;

· Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.

We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.”

Head to the next page for the full text of the Justice Department’s press release.

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