The Department of Justice has filed an antitrust complaint in federal court to block AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA, according to multiple reports. The complaint is a significant blow to AT&T's ambitions to combine with the nation's No. 4 wireless carrier.
"AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market," the Justice Department said in its filing in federal court in Washington, according to Bloomberg.
In a statement, AT&T General Counsel Wayne Watts said the company was blindsided by the lawsuit, and that AT&T is "surprised and disappointed" by the Justice Department's action. "We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed," he said. "The DOJ has the burden of proving alleged anticompetitive affects and we intend to vigorously contest this matter in court."
Watts reiterated claims AT&T has made in the past few months in support of the deal, namely that it will help improve wireless service for millions of customers, ease AT&T's spectrum crunch, bring LTE to 97 percent of all Americans, and lead to billions of dollars in additional U.S. investment and thousands of jobs.
Both the FCC and the Justice Department need to approve the deal for it to be finalized. The FCC is conducting a review on market competition and the Justice Department's review has largely centered on antitrust and anticompetitive issues.
"By filing suit today, the Department of Justice has concluded that AT&T's acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws," FCC Chairman Julius Genachowski said in a statement. "Competition is an essential component of the FCC's statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices."
Sprint Nextel (NYSE:S) has been the most outspoken opponent of the AT&T/T-Mobile deal. Other smaller wireless carriers including MetroPCS (NASDAQ:PCS), Leap Wireless (NASDAQ:LEAP) and Cellular South also are against the deal, as are many public interest groups. Meanwhile, technology heavyweights, including Facebook, Microsoft (NASDAQ:MSFT), Qualcomm (NASDAQ:QCOM) and Research In Motion (NASDAQ:RIMM), are in favor of the deal, as are many state governors.
If AT&T is unable to successfully close the deal, it will be forced to cough up cash, spectrum and roaming agreements worth a total of $6 billion, T-Mobile parent Deutsche Telekom confirmed in May. Around $3 billion of that will be cash.
AT&T executives previously expressed confidence that the deal will be approved. The company today, before the Justice Department's announcement, said it will bring 5,000 call center jobs back to the United States that are currently outsourced overseas if the deal is approved. AT&T also said it will not cut any U.S. call center jobs from AT&T and T-Mobile that are on the companies' payrolls if the deal closes. The two companies currently have around 25,000 call center employees combined. (See related article.)
- see this DOJ complaint (PDF)
- see this speech by Deputy Attorney General James M. Cole
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this WSJ chart (sub. req.)
- see this Reuters article
- see this Washington Post article
- see this separate Washington Post article
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