U.S. files suit to block AT&T and T-Mobile merger

August 31, 2011

The Associated Press

(Getty/Joe Raedle)
AT&T, the nation's number 2 mobile carrier and first to offer Apple's popular iPhone, wants to purchase T-Mobile.

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.

AT&T said it would fight the lawsuit, announcing that it plans to ask for an expedited court hearing "so the enormous benefits of this merger can be fully reviewed."

The Justice Department "has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court," said the AT&T statement.

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

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, Sharis Pozen, acting chief of Justice's antitrust division, said at the news conference.

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 government lawsuit which was filed in U.S. District Court in Washington.

The lawsuit says AT&T's acquisition of T-Mobile would eliminate a company that has been a competitive factor through low pricing and innovation.