×
×
homepage logo
LOGIN
SUBSCRIBE

US moves to block merger of AT&T, T-Mobile

By Staff | Sep 1, 2011

LOS ANGELES – The Justice Department is seeking to block AT&T Inc.’s $39 billion plan to buy T-Mobile USA Inc., claiming that combining the two wireless giants could stymie competition and innovation.

The agency filed a civil antitrust lawsuit Wednesday morning in federal court in Washington that would prevent AT&T, which has the second-largest subscriber base in the country, from acquiring fourth-largest T-Mobile.

The deal, according to the Justice Department, would displace Verizon Wireless as the largest wireless carrier in the U.S., leading to higher prices, lower-quality services, a smaller pool of choices and fewer pioneering technologies for millions of Americans.

Consumers in rural areas or with lower incomes would be especially hard-hit, Deputy Attorney General James M. Cole said in a statement.

AT&T said it was “surprised and disappointed” by the Justice Department’s move, saying that it had met often with the agency to work over potential pitfalls. The company said it planned to “vigorously contest this matter in court” and to request an expedited hearing to review the benefits of the acquisition.

Wayne Watts, the company’s senior executive vice president, said in a statement that the deal, announced in March, “is in the best interest of consumers” and could help improve wireless service for millions.

The proposal sparked heavy protests from consumer groups and rival telecom companies. With more than 300 million phones, tablets and other mobile wireless devices in service across the country, AT&T, T-Mobile, Sprint and Verizon dominate more than 90 percent of the market, the government said.

Taking T-Mobile out of play would eliminate Dallas-based AT&T’s need to compete on operational efficiency and aggressive pricing, the Justice Department said. T-Mobile is based in Bellevue, Wash. and is owned by German company Deutsche Telekom AG.

“This ought not to be a big surprise,” the nonprofit law firm Media Access Project said in a statement. “This is arguably the most anti-competitive move in recent American economic history. It is heartening that the Department of Justice has withstood withering political pressure from AT&T to do the right thing for the American public.”

After asking AT&T and T-Mobile for more information about competitive concerns, the Federal Communications Commission last week continued its review of the takeover. Though the consideration process is incomplete, Chairman Julius Genachowski said Wednesday that what his agency has seen so far “also raises serious concerns.”

“Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile,” he said in a statement.

Earlier in the day, AT&T announced that it would repatriate 5,000 call-center jobs that had been outsourced overseas if the takeover of T-Mobile goes through.

“At a time when many Americans are struggling and our economy faces significant challenges, we’re pleased the T-Mobile merger allows us to bring 5,000 jobs back to the United States and significantly increase our investment here,” said Randall Stephenson, AT&T chairman and chief executive.

Newsletter

Join thousands already receiving our daily newsletter.

Interests
Are you a paying subscriber to the newspaper? *