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DoJ files antitrust suit to block AT&T's T-Mobile buy

Deal will 'substantially lessen competition'

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The US Department of Justice has filed an antitrust lawsuit to block AT&T's proposed acquisition of fellow wireless carrier T-Mobile USA.

In a press release that hit the wires on Wednesday, the DoJ said that the $39bn deal would "substantially lessen competition" for wireless services in the US. AT&T runs what is likely the largest wireless network in the US, with about 95.5 million subscribers, while T-Mobile runs the fourth largest, with 23 million.

"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,” read a canned statement from Deputy Attorney General James M. Cole. “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.”

In March, AT&T announced that it had agreed to acquire T-Mobile USA from Deutsche Telekom in a deal valued at roughly $39bn. Whereas the country's two other major wireless players – Verizon and Sprint – offer networks based on the CDMA standard, AT&T and T-Mobile use GSM, the same technology used in most major markets across the rest of the world. These four carriers account for about 90 per cent of the country's wireless connections, according to the DOJ.

In its complaint, the DoJ says that AT&T and T-Mobile compete head-to-head in 97 of the country's top 100 regional wireless markets. The department said it gave "serious consideration" to claims from AT&T and T-Mobile that their merger would bring additional efficiency to the market – AT&T said the deal would allow the company to bring its planned 4G LTE (Long Term Evolution) network to T-Mobile subscribers – but in the end, it decided that any efficiencies would not outweigh competitive harm.

Prior to the DoJ's suit, AT&T announced that it would bring 5,000 call center jobs to the US after the deal closes, another effort to paint the deal as The Great American Merger. “This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations," AT&T boss Randall Stephenson said when the deal was announced.

"We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers’ current demands, build for the future and help achieve the President’s goals for a high-speed, wirelessly connected America.”

If the deal does not go through, T-Mobile still wins. Per the contract between the two companies, AT&T would have to pay T-Mobile $3bn, transfer some valuable wireless spectrum to the company, and sign a roaming agreement "on terms favorable to both parties". ®

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