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Sprint joins US feds in anti-AT&T lawsuit

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Hot on the heels of the US Department of Justice's lawsuit to block the proposed merger of AT&T and T-Mobile, Sprint Nextel has filed its own legal challenge to derail the deal.

"Sprint opposes AT&T's proposed takeover of T-Mobile," Sprint's VP for litigation Susan Haller said in a prepared statement released on Tuesday. "With today's legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal."

The lawsuit specifically cites Section 7 of the Clayton Antitrust Act of 1914, which amended the Sherman Antitrust Act of 1890 to, in part, stop mergers and acquisitions judged to substantially weaken competition in specific industries.

Filed in the same US District Court of the District of Columbia where the US Department of Justice filed its own suit last Wednesday, the lawsuit names AT&T, AT&T Mobility, T-Mobile, and T-Mobile's parent company, Deutsche Telekom, as defendants.

Sprint's objections mirror those outlined by the DoJ when it announced its filing. Sprint claims that the merger would "harm retail consumers and corporate customers by causing higher prices and less innovation," while the DoJ asserts that "unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."

Furthermore, Sprint claims that "if the transaction were to be allowed, a combined AT&T and T-Mobile would have the ability to use its control over backhaul, roaming and spectrum, and its increased market position to exclude competitors, raise their costs, restrict their access to handsets, damage their businesses and ultimately to lessen competition."

The proposed acquisition of the fourth-largest wireless carrier in the US by the second-largest carrier was announced this March. Sprint reacted within days, urging the government to block the deal.

Even before the US Federal Communications Commission launched its investigation into the deal, an unnamed FCC official told The Wall Street Journal: "There's no way the [FCC] chairman's office rubber-stamps this transaction. It will be a steep climb to say the least."

That climb has included AT&T and T-Mobile execs testifying at a US Senate hearing about the proposed merger. At that venue, AT&T president and CEO Randall Stephenson promised that "First and foremost, this transaction is about consumers," while T-Mobile USA president and CEO Philipp Humm claimed that the merger "will greatly benefit the American economy, consumers, and particularly T-Mobile customers."

Sprint Nextel CEO Daniel Hesse responded to those assertions by telling the senators: "I respect Randall and Phillip. They are doing their jobs, maximizing value for their shareholders. Unfortunately there are only three beneficiaries of the proposed transaction: the shareholders of AT&T, Verizon, and the sole shareholder of T-Mobile USA, Deutsche Telekom."

Now the matter is in the courts, with the DoJ and Sprint on one side and AT&T and T-Mobile on the other. As yet to weigh in with their opinion is the FCC, which only recently restarted its investigation after pausing to give AT&T more time to develop "new models to bolster its arguments."

The FCC should issue its opinion before year end. How long the court cases will grind on is anyone's guess.

There's no guessing, however, about who's making out like bandits during this entire process. According to the Center for Responsive Politics, AT&T has already spent about $11.7m on lobbyists during the first six months of this year – a bump-up of 30 per cent – and its political action committee has contributed $805,500 to federal candidates in 2011, more than any other company.

And still the DoJ sued them. Honestly, a dollar just doesn't go as far as it used to, eh? ®

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