Sprint Joins DOJ, Files Suit to Block AT&T/T-Mobile Merger6:06 PM EST Tue. Sep. 06, 2011
Following last week’s surprise antitrust suit brought by the U.S. Justice Department [DOJ], Sprint Nextel Tuesday also filed suit against AT&T, AT&T Mobility, Deutsche Telekom and T-Mobile in an effort to block the proposed $39 million merger and throw its own weight behind the government’s case.
Calling the deal a “takeover” that would “entrench the duopoly of AT&T and Verizon…of the almost one-quarter of a trillion dollar wireless market,” the suit said the proposed acquisition of T-Mobile by AT&T would increase prices while decreasing innovation and competition, and harm remaining independent mobile carriers.
“Sprint opposes AT&T’s proposed takeover of T-Mobile,” said Susan Z. Haller, vice president for litigation with Sprint. “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.”
Since the deal was announced last March, Sprint hasn't been shy about making its discontent known, comparing the mobile marketplace that would result from an AT&T acquisition of T-Mobile to a 1980’s-style “Ma Bell” duopoly in which high prices and limited choices ruled the day. And in May Sprint submitted a Petition to Deny the merger with the FCC.
On Aug. 30, the DOJ brought the suit seeking to block the merger on anti-competitive grounds, stating that the deal would essentially eliminate a major competitor in the national mobile marketplace, and would consolidate two of the remaining four national mobile carriers. T-Mobile competes directly with AT&T in 97 out of 100 markets, and has consistently been an innovator in the marketplace, the DOJ said in its complaint.
With nearly $6 billion to lose if the deal falls through for regulatory reasons, AT&T is walking a legal tightrope, on the one hand vowing to “vigorously” defend the merger in court, and at the same time reportedly coming to the table to work with the Justice Department, offering to make concessions that would allow the merger to proceed. While details of a settlement offer haven’t been released, Reuters has reported that AT&T would likely be willing to sell off 25 percent of T-Mobile’s business and to maintain T-Mobile’s low prices.
AT&T reacted Tuesday to the latest suit, taking aim at Sprint Nextel while defending the benefits of the proposed merger:
“This simply demonstrates what we’ve said all along – Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers," AT&T said in a statement. "We of course will vigorously contest this matter in court as AT&T’s merger with T-Mobile USA will: help solve our nation’s spectrum exhaust situation and improve wireless service for millions; allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population; and result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.”