Tech News

Dept. of Justice Moves to Block AT&T/T-Mobile Merger

August 31, 2011 at 9:29 pm

AT&T nom nom

The US Department of Justice has blindsided AT&T today, filing a lawsuit to block the proposed $39 billion merger with rival T-Mobile.  In a complaint filed HERE, the DOJ says that the merger would cripple competition, lead to hire prices, and worsen service.  Department of Justice Deputy Attorney General James Cole believes that the deal will result in tens of millions of consumers facing “fewer choices and lower-quality products,” but that “the door is open for AT&T to propose remedies in the deal”.  The complaint reads that “AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market.”  AT&T intends to “vigorously contest” the motion they said in an email to tech site BGR.

The merger has faced stiff opposition from Sprint, the US’s number 3 carrier, as well as citizen campaigns (mostly of outraged T-Mobile customers).  AT&T, however, has countered every move by dumping money into the problem, hiring lobbyists, and in some cases even threatening cities with poor service if the deal is denied.  Representatives of the Obama administration have stepped in to call for tighter anti-trust laws, which they believe were “lax” under the previous administration.

In AT&T’s public response, AT&T Senior Executive Vice President and General Counsel, Wayne Watts said, “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… We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.”

AT&T Shares fell 4% after the story broke this morning.

Via WSJ

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