Latest Tech News - Why the DOJ means business on AT&T and T-Mobile
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    Latest Tech News - Why the DOJ means business on AT&T and T-Mobile

    The U.S. Department of Justice filed a lawsuit in federal court today that could end the $39 billion merger between AT&T and T-Mobile USA.

    The DOJ said in its filing that the proposed $39 billion transaction would substantially lessen competition in the wireless market, resulting in higher prices, poorer quality services, fewer choices, and fewer innovative products.

    The agency said the elimination of T-Mobile as a competitor would be particularly harmful to subscribers in rural areas, where there are fewer players to choose from, and among low-income individuals.

    "T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network," Sharis A. Pozen, acting assistant attorney general in charge of the Department of Justice's Antitrust Division, said in a statement. "Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."

    AT&T, which will be forced to pay a $3.8 billion break-up fee to T-Mobile if the deal does not get done, said that it plans to fight the DOJ's lawsuit.

    "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," Wayne Watts, AT&T senior executive vice president and general counsel said in a statement. "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 anticompetitive effects and we intend to vigorously contest this matter in court."

    The only agency that is required to approve the merger is the Federal Communications Commission. Since the wireless companies have spectrum licenses granted by the FCC, that agency's approval is required to merge the companies. That said, the DOJ has also been reviewing the merger. And even though its approval is not necessary, if it finds that the merger will violate antitrust laws it can sue to block the merger. That is what the agency is doing now.

    AT&T will be allowed to fight the DOJ's claims in court and if a federal court agrees with AT&T, the deal could still go through. But it still must be approved by the FCC. The FCC says it's still reviewing the merger. But the DOJ's lawsuit could sway the agency's decision.

    "By filing suit today, the Department of Justice has concluded that AT&T's acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws," FCC chairman Julius Genachowski said in a statement. "Competition is an essential component of the FCC's statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices."





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