U.S. Justice Department Sues to Block AT&T, T-Mobile Merger

The U.S. Justice Department isn’t keen on AT&T’s proposed purchase of T-Mobile USA, and went so far as to file a case in Federal court in an effort to block the deal. According to the DOJ, combining the two companies would have a negative impact on the wireless service market, and would cut into competition.

The lawsuit was filed on Wednesday in U.S. District Court for the District of Columbia.

DOJ wants to block AT&T T-Mobile mergerDOJ moves to block AT&T, T-Mobile buyout

Deputy Attorney General James M. Cole commented, “The combination of AT&T and T-Mobile 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 DOJ contends that T-Mobile is currently an important player in the U.S. cell service market, and that losing the company to AT&T would reduce the competition between the remaining players, and would have an especially big impact in rural areas.

AT&T announced its plan to buy T-Mobile USA from Deutsche Telekom in March for about US$39 billion. At the time, AT&T said the deal would “provide an optimal combination of network assets to add capacity sooner than any alternative, as well as provide an opportunity to improve network quality in the near term for both companies’ customers.”

Sprint, the third largest carrier in the U.S. behind Verizon and AT&T, formally protested the deal, saying it was anticompetitive. “This transaction will harm consumers and harm competition at a time when this country can least afford it,” the carrier said.

The DOJ stance is inline with Sprint’s comments, too. Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, added “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”

AT&T has not yet commented on the DOJ’s filing.