updated 11:45 am EDT, Wed August 31, 2011
Would remove 'significant' competition from market
The US Justice Department has sued to block AT&T's acquisition of T-Mobile, Bloomberg reports. A Washington, DC court filing charges that the absorption of T-Mobile would violate antitrust laws. "AT&Tís elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market," the document reads.
The T-Mobile buyout is valued at approximately $39 billion. Should the deal be successfully blocked, AT&T will still owe T-Mobile's parent company, Deutsche Telekom, about $3 billion in cash. It has also promised to provide T-Mobile with wireless spectrum in some regions, and reduce charges for calls into the AT&T network. In all AT&T would have to spend as much as $7 billion.
AT&T has claimed that a merger would lower prices while improving service in major urban markets. Some US politicians, though, have argued that it would eliminate competition, and as a result allow prices to climb. The Justice Department may still conceivably be influenced into accepting the merger, but this would likely only happen after some negotiated concessions by AT&T.