A new roadblock stands in the way of the T-Mobile-Sprint merger as a coalition of state attorneys general filed a lawsuit Tuesday to stop the deal.
Reuters and Bloomberg report that the lawsuit, filed by nine states and the District of Columbia, argues that the merger will harm consumers and raise prices by at least $4.5 billion a year. It represents another hurdle for T-Mobile and Sprint, whose $26.5 billion merger is still under consideration by U.S. regulatory bodies.
The coalition of state attorneys general is led by New York’s Letitia James.
“The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country,” James said in a statement. “That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”
BREAKING: We're leading a coalition to block the proposed merger of T-Mobile & Sprint.
The merger would deprive customers of the benefits of competition & drive up prices for cellphone services.
When it comes to corporate power, bigger isn’t always better. #Megablock
— NY AG James (@NewYorkStateAG) June 11, 2019
Here’s more reasoning from James’ press release:
While T-Mobile and Sprint have made promises that their merger would offer lightning-fast speeds and increased capacity, the Attorneys General’s investigation found that many of the claimed benefits were unverifiable and could only be delivered years into the future, if ever. By contrast, if the merger were to go through, the combined company would immediately have the power and incentive to raise prices, while cutting quality. In short, any theoretical efficiencies that could be realized from the merger would be outweighed by the transaction’s immediate harm to competition and consumers.
Additionally, the merger would harm thousands of hard-working mobile wireless independent dealers in New York and across the nation. The ten states are concerned that further consolidation at the carrier level would lead to a substantial loss of retail jobs, as well as lower pay for these workers in the near future.
Shares of T-Mobile and Sprint were down on Tuesday following the news.
The Justice Department has not signed off on the deal. Reports surfaced in April that shed light on how officials weren’t buying the companies’ arguments that a combined T-Mobile and Sprint will increase competition with larger rivals AT&T and Verizon and up U.S. competitiveness in the next generation of wireless technology known as 5G.
Bloomberg reported last month that officials want T-Mobile and Sprint to set the table for a new wireless carrier, complete with its own network, as a concession for approval of the merger.
FCC Chair Ajit Pai recently gave his approval of the merger thanks to commitments from the two wireless companies that included a divestment of Boost Mobile, which has been rumored as a potential Amazon acquisition target.
In April 2018, T-Mobile and Sprint agreed to merge and create a $146 billion company under the T-Mobile name.
We’ve reached out to T-Mobile for comment and will update this story when we hear back.