Justice Department sues to block AT&T’s $39B purchase of T-Mobile

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.”

[Follow-up: Blindsided by DOJ suit, AT&T says it will fight for T-Mobile]

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.


Justice-ATT-TMobile-Complaint

  • http://twitter.com/athenachief Tom Ryan

    Great news for both the Seattle economy and mobile consumers everywhere if this merger is blocked.  If it went through it would lead to massive local layoffs and leave AT&T as a single monopoly in GSM mobile technology. 

  • http://twitter.com/ryanlaursen Ryan Laursen

    I agree with Tom, but I’m not sure how long Deutsche Telekom will put up with low revenue and high customer churn. I hope they take the opportunity to address customer retention. I was with them for 8 years before switching to Verizon. 

  • http://twitter.com/athenachief Tom Ryan

    I agree back at you Ryan, and it’s predictable and fine if T-Mobile is sold to someone else – just not AT&T.  There will at least be two GSM carriers to choose from if someone else purchases them.
     
    Ideally it would be another European carrier that would keep the jobs here.  Our region would have been much better off if Vodaphone would have purchased the old/original AT&T Wireless instead of Cingular. Deutsche Telekom purchase of Voicestream around a decade ago has been a great thing for local wireless employment.

  • Guest

    But Google buying MMI is okay? Gotta love the Fed Govt.

  • http://www.facebook.com/profile.php?id=1357885604 Scott Campbell

    Maybe with the rumors of T-Mobile getting the next gen IPhone in October it will boost revenue and slow the bleeding of current customers.

  • Nerd who wants freedom

    I agree with tom and ryan the only reason tmobile lost customer is because of the boom of iphone but better phone are now surfacing. If tmobile get a iphone and keep get new and great phone like galaxy s2 while increasing coverage. They dont have to worry about customers leaving. If DOJ denies the merger watch how fast ppl go back to tmobile. Most ppl dont want to leave att to got to tmobile because they are just going to be bought out by att. While other customer dislike att so why would they want to be stuck with them if merger goes through. I have been with att bill was to high. So tmobple was next choice until i got word of merger.Keep the low price and dont allow merger to go through and I will become a customer but not until the merger is denied.