U.S. Government Files Antitrust Lawsuit Against AT&T to Thwart T-Mobile Merger

[Phillip Swanson]

The U.S. Government has finally played their hand and decided to file an antitrust lawsuit against AT&T to prevent the company's proposed merger with T-Mobile USA.

In the complaint filed today, the U.S. government asked for a court order to prevent AT&T's takeover claiming the deal would "substantially lessen competition." The stakes are high for AT&T. The deal brokered between AT&T and T-Mobile can be seen as a win-win for T-Mobile's parent company Deutsche Telekom. If the merger is approved, the newly formed company is the largest wireless carrier in the United States. If the deal folds, AT&T is required to pay Deutsche Telekom $3 billion in cash.

The deal gets even sweeter too. AT&T would also be on the hook for providing T-Mobile USA with wireless spectrum in some regions, and reduced charges for calls into AT&Ts network. This would increase the price of AT&T's liability to around $7 billion, and this is if the deal doesn't get done! AT&T will fight this lawsuit, and fight hard.

A decision by by the courts is still a ways off and the FCC still hasn't approved the deal as they are going over newly submitted data. The data submitted by AT&T is supposed to show, somehow, that the acquisition would lower costs in addition to strengthen AT&T's network. Even if they regulators approve, the Justice Department's suit could prevent the merger. However, as Andrew Gavil, a Howard University Law Professor, points out, AT&T has a lot to lose.

Given the size of the cancellation fee that was negotiated into his agreement, AT&T has the incentive to fight. The fact that the Justice Department is challenging the deal doesn’t mean they won’t negotiate a resolution at some point. - Gavil

If this merger is approved, I agree it would strengthen AT&T's subpar network, but to think that it would translate to lower costs for consumers is downright naive. AT&T's track record shows no evidence that would allow any sane person to conclude this merger would benefit the consumer in any substantial way. However, it would limit competition, create the largest carrier in the U.S. and probably strangle Sprint out of the industry before long. But, with the right amount of lobbying power anything can be rationalized.

The fact this lawsuit was even filed is a preliminary victory for the American consumer. Dealing with telecoms is already bad enough. Choosing a telecom provider is akin to choosing what devil to dance with at an exceptionally bad high school reunion. There's no need to make AT&T the DJ.

Source: Bloomberg

[vantheman169]

I hope the merger doesn't happen. A merger would be bad for consumers.

[Knight Of One X]

It seems pretty bad in the US, over here in the UK it's pretty easy to choose between carriers.

[qbnucca]

AT&T is the devil and the FCC should shut them down because of bad management. They change their contracts whenever they feel, whether your locked into a contract or not. They change whatever they want to with no regards to the customer. Their business practices remind me of the republican party. We will do whatever we want with your live and you will deal with it, because you have no choice, especially since Verizon is now AT&T2

[Mes]

In the US we use two cellular technologies, GSM and CDMA
If AT&T acquired T-Mobile, GSM would be exclusive to AT&T.
By my definition, that's a monopoly. Not good for anyone!

[iBlkCeaser]

Everyone is looking at it wrong think about areas where tmobile has no service and areas where Att has no service combining the two together will improve service in those areas. I live in Mississippi and it's some places where service for either one is hard to come by. Either you're on 3G, edge, or no service at all. Many more places in the US have the same problem. It's not to think of a monopoly but for us small towns and small cities this will bring better coverage and options to us.

[GrandMstrBud]

Only 1 comment to this article? Strange, but regardless it's good to see the government step in and do something right

[Extremador]

Seriously? If two companies are in AGREEMENT to merge, LET THEM MERGE! Land of the free my ***.

[emerica6708]

Seriously? If two companies are in AGREEMENT to merge, LET THEM MERGE! Land of the free my ***.

That's like saying Apple and Microsoft can merge if they want to, if that was going to happen the government would and should step in. A merger of this magnitude could wreck the wireless cell service. When there is only three or four major carriers and two of them want to combine it can royally screw the nations wireless cell consumers.

[sziklassy]

I don't see how this merger would hurt iPhone users. It's not like TMO is really even on ATT's radar when it comes to the iPhone. I could care less about the merger to be honest. Things will likely continue the way they have been with or without it. TMO is way too small of an influence in the states to make much of a difference.

[Tario70]

Anyone saying this is a monopoly indicates that you don't know the meaning of the word.

The technology behind the service offered doesn't matter! 3 Major cellular companies would exist after this merger, not one, hence no monopoly. & don't forget the regional carriers that would still be available.

Correct me if I'm wrong (because I know all of you will) but isn't LTE a GSM technology? & isn't Verizon switching to it? So is anyone going to stop Verizon from switching tech so CDMA remains?

This is likely just a way to get AT&T to the negotiating table. This deal will happen, everyone is just going to have to deal with it.

[kylej80]

AT&T is the devil and the FCC should shut them down because of bad management. They change their contracts whenever they feel, whether your locked into a contract or not. They change whatever they want to with no regards to the customer. Their business practices remind me of the republican party. We will do whatever we want with your live and you will deal with it, because you have no choice, especially since Verizon is now AT&T2

Nice stab at republicans. Democrats definitely have their hands clean with that huge reworking of healthcare that was put into place in the middle of the night with no vote... but I digress. AT&T is not the devil, they're a normal american business. They offer a service, and people who are ok with their way of business buy their services. If you don't like how they run their business, then DON'T USE AT&T. You claim you have no choice with their policies... cancel and sign up with Verizon or Sprint. YOU are making your choice by sticking with AT&T. If the merger happens, Sprint and Verizon still exist meaning there's no monopoly and no reason for government intervention. If AT&T try and bully customers when they're the largest cell provider, people will switch to other companies causing AT&T to fix itself or shrink back down. If people stick with AT&T while getting bullied, they're making the choice to accept bullying because they see the service as a whole as still better than the competitors'.

[indyzzzz]

Glad to see the govt step in here.....whatever their reason may be