The U.S government put a giant wrench in AT&T’s plans to merge with T-Mobile. Today in federal court, the U.S. filed a civil antitrust complaint against the merger, effectively suing to block the $39 billion transaction on the basis that the deal would “substantially lessen competition,” according to Bloomberg.
AT&T has said that the merger, which would make it the largest wireless carrier in the U.S., would create more than 5,000 jobs and make wireless cheaper for consumers. But the government isn’t buying it. Within its filing, the government said “AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market.” T-Mobile currently offers some of the most affordable plans on the market, while AT&T’s plans are not as thrifty.
“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,” said Deputy Attorney General James M. Cole in a press statement.
If the merger doesn’t go through, the Bloomberg article notes that T-Mobile will get a consolation package from AT&T that’s worth $7 billion.
The Justice Department is holding a press conference at 12pm EST regarding today’s filing, which you can download as a PDF.
AT&T has issued a response and will ask for an expedited hearing “so that the enormous benefits of this merger can be fully reviewed.”
TechCrunch obtained the following statement from Wayne Watts, AT&T senior executive VP and general counsel.
We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated. We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.
Watts goes on to argue that the merger will help solve the nation’s spectrum exhasust situation and improve wireless service. He also reiterated that AT&T will be able to expand mobile broadband to another 55 million Americans, and that the additional investments AT&T plans to make will result in tens of thousands of more jobs. Then again, this number doesn’t factor in how many T-Mobile jobs will be lost.