Feds sue to block AT&T deal to buy T-Mobile
WASHINGTON - 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.
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.
Read the complete DOJ complaint
ZDNet: Winners and losers in DOJ suit
CNET: Why DOJ means business on AT&T, T-Mobile
Sprint's lobbying pays off with new ally: DOJ
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.
"Things will move fast at first as the parties fight over whether a federal judge should initially block the move. If it is blocked we'll either see the deal withdrawn, or restructed to satisfy the feds, or we'll see a long, drawn-out court case," CBS Radio News legal analyst Andrew Cohen said.
AT&T would be forced to pay a $3.8 billion break-up fee to T-Mobile if the deal does not get done, notes CNET's Marguerite Reardon.
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.
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.
It says AT&T's acquisition of T-Mobile would eliminate a company that has been a competitive factor through low pricing and innovation.
Federal Communications Commission 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.
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Seriously speaking, Verizon Wireless is a 50/50 venture between Verizon and Vodafone (which is like 80% of the wireless market in 20 countries). The 2 joint companies could muster up enough money to buy AT&T wireless easily. And, there would be nothing the Fed could do. The term Duolopoly and Monopoly are the same thing.
Don't you think that if there was just really AT&T Wireless and Verizon Wireless, that they would treat you exactly the same? Cost, gouging of your plan, etc...??? If Verizon wireless raised it price, AT&T wireless would do the exact same. So it's not really a duolopoly, because effective they are 2 companies behaving as one.
They have to stop these super mergers and get over themselves. Look at all the bank mergers that let up to the 2008 stock market crash, and you telling me the big cell phone companies merging together won't cause a problem like that? Get real
Translation: AT&T will talk to the politicians they bought and paid for to apply pressure to the FTC to approve the merger. AT&T will also find the jurists who will review the appeal and make sure the "benefits" will be "fully reviewed" in their bank accounts before rendering a decision.
Of course, they may actually have it blocked, but given the lack of faith I have in government oversight of business practices, I expect someone will be making a lot of money, and it won't be the customers.
COMPETITION is what drives down prices and keeps innovations coming.
THANK YOU FED! Now, break up the 4 food companies controlling all our food supply and the media moguls dictating what they think we want to see and hear to fill their pockets.
COMPETITION MAKES PEOPLE BETTER!!!
Maybe so. They will also TERMINATE more than 30,000 jobs in the front and back offices of T-Mobile.
This will be done in stages. They will work their remaining employees at AT&T harder and service WILL BE negatively affected. Competition...you can kiss that goodbye! Sprint is hurting and Verizon will not be able to muster much of a response because they will like the cost structure that AT&T establishes.
Kill this merger quickly and have AT&T pay T-Mobile the $3.8 billion breakup fee.
BTW, I am a T-Mobile customer and have not been an AT&T customer for about 11 years. I learned my lesson about AT&T back then. If anything, AT&T has continued its downward spiral in service.
Have a nice day!