At a news conference, Deputy Attorney General James Cole said the combination would result in “tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services.”
The company said the government “has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court.”
Four nationwide providers – Verizon, AT&T, T-Mobile and Sprint – account for more than 90 percent of mobile wireless connections.
T-Mobile has been an important source of competition, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network, according to Sharis Pozen, acting chief of Justice’s antitrust division.
Mobile wireless telecom services play an increasing role in day-to-day communications, with more than 300 million smart phones, data cards, tablets and other mobile wireless devices in use.
In a statement, Sprint said the Justice Department’s lawsuit “delivered a decisive victory for consumers, competition and our country. By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers’ interests first.”
The Justice Department suit says AT&T’s acquisition of T-Mobile would eliminate a company that has been a competitive factor through low pricing and innovation. T-Mobile had the first handset using the Android operating system, Blackberry wireless email, the Sidekick smart phone, national Wi-Fi “hotspot” access and a variety of unlimited service plans.
In support of its case, the Justice Department quoted an unidentified AT&T employee on a competitive issue – sophisticated wireless broadband devices that can provide high-speed data connections. The FCC’s separate review of the proposed merger is not yet complete.
T-Mobile said its strategy is to attack other companies and find innovative ways to overcome the fact that it is a smaller company.
T-Mobile “will be faster, more agile and scrappy, with diligence on decisions and costs both big and small,” one company document said. The suit also says the anti-competitive problems a merger would cause cannot be overcome by regional companies.
Regional companies lack national networks, so are limited in their ability to compete with the four national carriers, the lawsuit states.
Anybody wanting reassurance that the Justice Department acted wisely in opposing AT&T Inc. (T)’s attempted merger with T-Mobile USA Inc. should spend a few minutes comparing mobile-phone rates online.
Right now, U.S. consumers enjoy four main choices for mobile-phone coverage. Sprint Corp. and T-Mobile, a division of Deutsche Telekom AG (DTE), are the smaller players. Even though T-Mobile doesn’t win every comparison, the boldness of its price-cutting is undeniable.
What would happen if T-Mobile’s independence went away? Intense Rivals
The profitable mobile-phone business needs no such indulgence.
Lily Tomlin Skit
Planners ruled, market forces were weak and innovation was constricted. We’re the phone company.”
Mobile-phone technology has enormous untapped potential. The Justice Department's rejection of AT&T's proposed purchase of T-Mobile USA will test new federal guidelines on challenging mergers and the companies' resolve in forming the nation's largest wireless carrier.
AT&T is promising to fight the Justice Department's decision. The department filed a lawsuit Wednesday to block the $39 billion deal, saying it would reduce competition and lead to price increases for customers.
In the end, Oracle pulled off something few companies have done in the past 30 years: It persuaded a federal judge that the Justice Department didn't have grounds to block its PeopleSoft deal. Usually, not even the most powerful companies bother to fight government regulators in an antitrust dispute. Google Inc., for example, backed off in 2008 when the Justice Department threatened to sue to block a proposed Internet search partnership with Yahoo Inc. Microsoft Corp., the world's largest software maker, pulled out of a deal to buy Intuit Corp. in 1995 after the Justice Department objected.
The Justice Department filed 138 antitrust cases in federal courts from 1999 to 2008 and lost just four of them, according to the latest breakdown from the agency.
Wall said AT&T may have a tougher time proving its case than Oracle did against the Justice Department. In the PeopleSoft deal, Wall said, antitrust enforcers seemed to be manipulating the definition of the business software market. If AT&T persists, antitrust experts said that it's better off going up against the Justice Department than the Federal Trade Commission, which also handles antitrust reviews. That's mainly because lawsuits with the Justice Department are contested in federal courts.