Seven States Join DOJ Effort to Block AT&T/T-Mobile Merger

proposed $39 billion merger between AT&T and T-Mobile

State attorneys general, representing California, Illinois, Massachusetts, New York, Ohio, Pennsylvania and Washington, on Friday joined with the suit and said they agree with the DOJ’s claim that the merger would decrease competition, raise prices and stifle innovation.

“The proposed merger would create highly concentrated markets in Massachusetts and could lead to higher prices and poorer service,” said Massachusetts Attorney General, Martha Coakley. “Competition will best serve consumers and businesses in Massachusetts who rely on mobile wireless services in their everyday lives.

"We have had an excellent working relationship with a number of state attorneys general and they have provided invaluable assistance throughout our investigation," the Justice Department said. "We are pleased that these states have joined the department in its lawsuit."

The move came on the heels of a letter supporting the merger sent last Thursday to President Obama by 15 democratic lawmakers, who urged the President to direct the Justice Department settle the suit and allow the merger to proceed. The 15 congressmen said much-needed job creation and improved high speed Internet access for millions would result from a combined AT&T and T-Mobile.

AT&T was dismissive of the attorneys general’s action in a statement, and said it will continue to seek an alternate solution to save the merger:

“It is not unusual for state attorneys general to participate in DOJ merger review proceedings or court filings. At the same time, we appreciate that 11 state attorneys general and hundreds of other local, state and federal officials are publicly supportive of our merger. We will continue to seek an expedited hearing on the DOJ’s complaint. On a parallel path, we have been and remain interested in a solution that addresses the DOJ’s issues with the T-Mobile merger.”

Meanwhile, Sprint Nextel, who has been the most vocal opponent to the proposed merger, issued a statement in support of the attorneys general.

“After a comprehensive review of the facts related to AT&T’s proposed takeover of T-Mobile, seven state attorneys general have reached the same conclusion as the U.S. Department of Justice: This proposed takeover violates antitrust law and would harm consumers, competition and our nation’s economy,” said Vonya McCann, Sprint senior vice president for Government Affairs. “This is a strong stand for American consumers, and Sprint commends this bipartisan group of state attorneys general for joining with the U.S. Justice Department to protect consumers, competition and American jobs.”

Sprint also filed suit to block the merger earlier this month.

AT&T may be ready to make major concessions in a settlement that would allow the merger to proceed. But with seven states adding their muscle to the suit, more parties will have to agree to the conditions, which could make reaching a settlement trickier, according to reporting by Reuters.

Should the deal fall through for regulatory reasons, AT&T could owe T-Mobile’s parent company, Deutsche Telekom, an estimated total of $6 billion – including a cash breakup fee of $3 billion plus added roaming and spectrum rights.

A preliminary hearing has been set for September 21 in U.S. District Court in Washington, with a final trial date yet to be determined.