Justice Department Blocks AT&T & T-Mobile Merger

WASHINGTON (AP) – The Justice Department filed suit Wednesday to block AT&T’s $39 billion deal to buy T-Mobile USA on grounds that it would raise prices for consumers.

The government contends that the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition and that would lead to price increases.

At a news conference, Deputy Attorney General James Cole said the combination 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.”

The lawsuit seeks to ensure that everyone can continue to receive the benefits of competition, said Cole.

AT&T said it would fight and ask for an expedited court hearing “so the enormous benefits of this merger can be fully reviewed.” The company said the government “has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court.”

Four nationwide providers — Verizon, AT&T, T-Mobile and Sprint — account for more than 90 percent of mobile wireless connections.

T-Mobile has been an important source of competition, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network, according to Sharis Pozen, acting chief of Justice’s antitrust division.

Mobile wireless telecom services play an increasing role in day-to-day communications, with more than 300 million smart phones, data cards, tablets and other mobile wireless devices in use.

Deutsche Telekom, the owner of T-Mobile, had no immediate comment.

The proposed cash-and-stock transaction would catapult AT&T past Verizon Wireless to become the nation’s largest wireless provider, and leave Sprint Nextel Corp. as a distant number three.

In a statement, Sprint said the Justice Department’s lawsuit “delivered a decisive victory for consumers, competition and our country. By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers’ interests first.”

AT&T and T-Mobile compete nationwide, in 97 of the largest 100 cellular marketing areas, according to the suit filed in U.S. District Court in Washington. They also vie for business and government customers.

The Justice Department suit says AT&T’s acquisition of T-Mobile would eliminate a company that has been a competitive factor through low pricing and innovation. T-Mobile had the first handset using the Android operating system, Blackberry wireless email, the Sidekick smart phone, national Wi-Fi “hotspot” access and a variety of unlimited service plans.

In support of its case, the Justice Department quoted an unidentified AT&T employee on a competitive issue — sophisticated wireless broadband devices that can provide high-speed data connections. The AT&T employee, said the lawsuit, noted that T-Mobile was first to have such devices in their portfolio and that “we added them in reaction to potential loss of speed claims.”

Federal Communications Commission chairman Julius Genachowski said the record before the FCC “raises serious concerns about the impact of the proposed transaction on competition.” The FCC’s separate review of the proposed merger is not yet complete.

FCC member Michael Copps, a Democrat and a staunch opponent of industry consolidation, said that he shares “the concerns about competition and have numerous other concerns about the public interest effects of the proposed transaction, including consumer choice and innovation.”

Democratic Sen. Herb Kohl of Wisconsin, who heads the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights, said the suit was an effort to protect consumers “in a powerful and growing industry that reaches virtually every American.”

The suit used some of T-Mobile’s own documents describing its role in the market to explain why the merger shouldn’t take place. In those documents, the company calls itself “the No. 1 challenger of the established big guys in the market and as well positioned in a consolidated 4-player national market.”

T-Mobile said its strategy is to attack other companies and find innovative ways to overcome the fact that it is a smaller company.

T-Mobile “will be faster, more agile and scrappy, with diligence on decisions and costs both big and small,” one company document said. “Our approach to market will not be conventional, and we will push to the boundaries where possible.”

The suit also says the anti-competitive problems a merger would cause cannot be overcome by regional companies.

Regional companies lack national networks, so are limited in their ability to compete with the four national carriers, the lawsuit states.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)


One Comment

  1. darrell says:

    what isnt said in this release is the 20,000 jobs lost because of the merger. those 5000 “new” jobs may not go to americans either. much of the call center outsourcing done in this country is done my foriegners who are here on a H1b visa which is allowed to foriegne buisness owners here in america to bring people from say their home country here with promised jobs. it gives the new “employee” a fast track status to citizenship as well. the visa’s are cheap.

    it may bring 5000 jobs home, but it does not mean it will be for 5000 americans. besides, remember back in the 80’s when AT&T came out with a new logo and catch phrase. “AT&T setting your life free”. then they turned around a month later and layed off 10,000 people. yup,, set their lives free allright.

    1. timby says:

      You got that right. Smoke and mirrors. They don’t want it to look bad and have folks in the US to think they’re just trying to get the merger through so they can make a few extra billion a year in profits. Also, if it goes through then they get to cut out a cheaper competitor.

  2. James says:

    Yeah 5k jobs in exchange of fu…ng millions with higher prices and less options. Don’t let those monsters take control of T-Mobile the first step is going to be an increase in orices to pay for the adquisicion that’s how they do it they don’t use their own money and after a while job losses come second.

  3. David Griffin says:

    I sure hope AT&T keeps the T-Mobile girl. She is better than any AT&T commercial.

    1. Lloyd Christmas says:

      The first time I set eyes on the T-Mobile girl, I just got that old fashioned romantic feeling where I’d do anything to bone her.

  4. Mike Sutton says:

    And this outsourcing is exactly why when I call my home mortage company, I can’t understand a word they are saying. And it takes two days to get things done that could take 1/2 day.

    And I ahve had AT&T, TV, Phone, and internet, It all sucked. I’ve had T-Mobile for 8 years and have no complaints. Their service is top notch. Be it phone or internet.

    1. Kristin says:

      I agree Mike – i have had T-Mobile since they were Voicestream so well over 10 yrs. I absolutely refuse to do business w/AT&T ever again after dealing with my home phone and internet service w/them. I am currently out of contract and just waiting to see if I can renew my contract if it stays T-Mobile or if I have to go to Verizon.

  5. darrell says:

    no merger in US history between two major cooperations has ever occured without the loss of thousands of jobs as assets are reassigned, logistics are rerouted and surplus facilities and personnel are sold or terminated. usually the company being aquired suffers the most loss of personnel and assets.

  6. Chuckc says:

    How many jobs will be lost if T-Mobil goes under?

  7. darrell says:

    the deal will not be blocked. this is smoke and mirrors to give time for wealthy democrats in power to up their stake in AT&T after the shares settle at a new low. once that occurs the merger will be approved, stocks shoot through the roof, huge profits will be made. watch and see.

  8. timby says:

    I was in the Telecom business for the last 25 years. I’ve seen the companies down/right size and off shore positions. Also, seen these too big to fail entities pull the wool over government’s eyes to increase H1B’s to import cheap slave labor. What this merger would mean is that AT&T kills off the cheaper competition. Then it shadows the key players from T-mobile. Next they will down/right size the corporation. This means getting rid of most, if not all, of the T-Mobil folks. Those fictitious new jobs would be from existing AT7T folks in their call centers overseas.

  9. C Bauer says:

    AT&T has always been an obnoxious juggernaut and a festering boil on the body of the business world. Remember the antitrust suit the government brought against them in the early 80’s?

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