Updated 3:59 p.m., Aug. 31
The U.S. government has filed suit to block AT&T’s proposed $39 billion merger with T-Mobile, Bloomberg reported on Wednesday.
The Justice Department filed a federal complaint in Washington, saying the deal would “substantially lessen competition,” raise prices for consumers, and should be declared in violation of U.S. antitrust law. The DOJ is seeking a court order to block it from going forward, Bloomberg reports.
Shares of AT&T fell nearly 4 percent on the news.
“The Department filed its lawsuit because we believe 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 their mobile wireless services,” said Deputy Attorney Gen. James M. Cole in an 11 a.m. press conference today.
Cole also noted that AT&T and T-Mobile – the nation’s second-largest and fourth-largest wireless providers, respectively – “currently compete head-to-head in 97 of the nation’s largest 100 cellular marketing areas,” adding “were the merger to proceed, there would only be three providers with 90 percent of the market, and competition among the remaining competitors on all dimensions–including price, quality, and innovation–would be diminished.”
Cole pointed out that the DOJ complaint includes testimony from an AT&T employee admitting that the company was compelled to introduce new features to compete with T-Mobile. Cole said the employee said that “[T-Mobile] was first to have HSPA+ devices in their portfolio…we added them in reaction to potential loss of speed claims.”
The move comes as a shock after the Federal Communications Commission, which is also reviewing the merger, last week re-started its self-imposed 180-day “shot clock” on the time it could take to approve or sideline the deal.
Sources at the FCC told TPM at the time that a decision would likely come before the self-imposed deadline of December.
Late Update: FCC Chairman Julius Genachowski responded to the news with a brief statement.
Late Late Update: AT&T hasn’t taken the news lying down, instead vowing to fight the case in federal court, saying “We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.”
Deutsche Telekom, T-Mobile’s parent company, headquartered in Bonn, Germany, also issued a statement saying it “will join AT&T in defending the contemplated merger against the complaint in court.”
