Post date: Aug 31, 2011 5:38:18 PM
The United States sues to block AT&T's $39 billion deal to buy T-Mobile USA because of anti-competition concerns.
WASHINGTON, D.C., UNITED STATES (AUGUST 31, 2011) NBC -The U.S. government sued to block AT&T's $39 billion deal to buy T-Mobile USA because of anti-competition concerns, launching the biggest challenge to a takeover by the Obama administration.
"The Department filed this lawsuit because we feel the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services," U.S. Deputy Attorney General James Cole said at a news conference in Washington on Wednesday (August 31).
A failed deal would be expensive for AT&T, which plans to fight the government's decision in court. It promised to pay a breakup fee worth an estimated $6 billion, including $3 billion in cash, spectrum and a roaming agreement for T-Mobile USA.
The Justice Department, in a lawsuit filed on Wednesday (August 31), said eliminating T-Mobile as a competitor would be disastrous for consumers and would raise prices, particularly because the smaller provider offers low prices.
"Unless this merger is blocked, competition and innovation in the mobile wireless market in the form of low prices, innovative wireless handsets, operating systems and calling plans will be diminished, and consumers will suffer," said Sharis Pozen, acting head of the Justice Department's antitrust division.
AT&T will fight the decision in court, said company lawyer Wayne Watts, who added that the Justice Department had given the company no indication that it was contemplating such a move.
The company has argued the deal would let it add capacity and meet demand for high-speed wireless service.
AT&T shares fell more than 4 percent on the news while shares of rival Sprint jumped 9 percent.
The lawsuit is the biggest challenge to a takeover by the Obama administration, which includes former AT&T executive William Daley as Commerce Secretary.