The Department of Justice on Wednesday moved to block AT&T’s acquisition of T-Mobile, on the grounds that it would “substantially lessen competition” in the wireless market.
The government sued to block the $39 billion purchase in a federal court in Washington, D.C., and it hopes that the court will eventually hand down an order blocking the deal.
Deputy Attorney General James M. Cole said in a statement: “The combination of T-Mobile and AT&T 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. 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.”
AT&T responded to the decision in a statement, expressing surprise and disappointment at DOJ’s motion.
“We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed,” AT&T’s senior vice president and general counsel said in the statement. “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.”
The DOJ has basically said that AT&T would be better served by spending its billions improving its own network rather than eliminating the competition. The Federal Communications Commission is also reviewing the merger, and it has yet to release a formal opinion, but chairman Julius Genachowski has expressed reservations about the deal.
“Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition," Genachowski said in a statement.
In the past, Sens. Herb Kohl and Al Franken have also spoken out against the deal.
PCMag lead mobile analyst Sascha Segan said “it’s good news for consumers looking for ‘independent, low-priced’ mobile phone service, for phone makers who still have T-Mobile to sell to, and for innovative technology suppliers who can provide ways for carriers to use their spectrum efficiently.”
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