U.S. Department of Justice sues to block AT&T acquisition of T-Mobile

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U.S. Department of Justice sues to block AT&T acquisition of T-Mobile

2011-09-01 03:39:54 GMT+7 (ICT)

WASHINGTON, D.C. (BNO NEWS) -- The U.S. Department of Justice (DOJ) on Wednesday filed a civil antitrust lawsuit to prevent AT&T Inc. from acquiring T-Mobile USA from Deutsche Telekom in a $39 billion transaction.

According to the DOJ, the proposed acquisition, which was announced in March, would reduce competition in mobile wireless telecommunications services, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for tens of millions of consumers all across the United States.

"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," said Deputy Attorney-General James M. Cole.

The top four providers of mobile services in the United States, which account for more than 90 percent of mobile wireless connections, are AT&T, T-Mobile USA, Sprint Nextel and Verizon.

The proposed deal would combine two of those four, eliminating T-Mobile from the market, a firm which has been an important source of competition among the national carriers through low pricing, innovation and quality enhancements.

If completed, the transaction would also reduce the ability of regional providers to compete and prevent potential entry from new mobile services providers, the DOJ claims.

The DOJ also said in its complaint that AT&T has not demonstrated the benefits which would allegedly result from the transaction and overweight the adverse impact on competition and consumers. It further said that AT&T could obtain the same network enhancement by investing in its own network without eliminating a close competitor.

In response to the news, AT&T Executive Vice President and General Counsel Wayne Watts said the company was "surprised and disappointed" by the government's action. He further said the company is planning to ask for an expedited hearing to fully review the benefits of the merger.

AT&T previously argued that the proposed deal would help solve the nation's spectrum exhaustion, expand 4G LTE mobile broadband to 55 million Americans and overall improve mobile wireless service for millions. Additionally, the company claimed the merger would create thousands of new jobs.

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

Earlier on Wednesday, AT&T announced plans to move 5,000 T-Mobile call center jobs back to the United States after the deal's completion. The company's announcement came just hours before the Justice Department filed its antitrust lawsuit to block the merger.

Stocks of AT&T Inc fell 3.85 percent in response to the lawsuit.

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