The U.S. Justice Department has filed suit to stop AT&T’s proposed $39 billion acquisition of T-Mobile USA, saying the deal would hurt competition in the wireless industry, reports Bloomberg News. As a result of the suit — filed in federal court in Washington D.C. — Sprint’s stock is up more than seven percent in morning trading.
“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” according to a copy of the complaint obtained by The New York Times. “Thus, unless this acquisition is enjoined, customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger.”
Sprint CEO Dan Hesse has been campaigning to block the merger, as have several politicians. The Public Utilities Commission in California also has been taking a closer look at the deal, researching how the acquisition would impact consumers and corporate customers in the state.
But the Justice Department’s antitrust lawsuit is the biggest roadblock to date.
Interestingly, the suit comes just a few hours after AT&T announced that it plans to bring 5,000 call center jobs back to the U.S. if the deal meets with approval.
T-Mobile, a unit of Deutsche Telekom, is based in Bellevue. It is the fourth largest wireless company in the U.S. We’ve reached out to T-Mobile for comment, and we will update the post as we hear more.
Update: Here’s a copy of the Justice Department’s suit.