Sprint sues to block AT&T/T-Mobile deal

Sprint Nextel (NYSE:S) filed a lawsuit in federal court to block AT&T's (NYSE:T) proposed $39 billion acquisition of T-Mobile USA, less than a week after the Department of Justice filed a similar complaint.

The lawsuit, filed in U.S. District Court in Washington, D.C., said that the AT&T/T-Mobile deal violates Section 7 of the Clayton Antitrust Act. Section 7 of the law prohibits mergers and acquisitions either "where the effect of such acquisition may be to substantially lessen competition" or where the deal restrains "such commerce in any section or community, or tend to create a monopoly of any line of commerce."

The Sprint lawsuit is a companion lawsuit to the Justice Department's filing, which also focused on the negative impact the deal would have on competition and market concentration. However, Sprint's suit is more narrowly focused on potential harms specifically to consumers and competition in general. In its filing, Sprint said the deal is "brazenly anticompetitive" and is a "classic violation of antitrust merger law." Sprint filed its lawsuit with the same judge that the Justice Department filed its complaint with, U.S. District Judge Ellen Huvelle.  

Sprint's suit focuses on many familiar arguments the company has made against the acquistion since the AT&T/T-Mobile deal was announced in March. Sprint argues the deal will raise prices, reduce innovation, give AT&T too much purchasing power with infrastructure and handset vendors and concentrate too much of the market between AT&T and Verizon Wireless (NYSE:VZ).

"This simply demonstrates what we've said all along--Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers," AT&T said in a statement. "We of course will vigorously contest this matter in court as AT&T's merger with T-Mobile USA will: help solve our nation's spectrum exhaust situation and improve wireless service for millions; allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97 percent of the population; and result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most."

Multiple reports have indicated AT&T will simultaneously try to fight the Justice Department's lawsuit against the deal and concurrently work with the Justice Department to make the deal more palatable. Deutsche Telekom said it is open to working with AT&T on finding conditions to make the Justice Department look at the deal more favorably. 

For more:
- see Sprint's full complaint (PDF)
- see this release

Related Articles:
Deutsche Telekom: We're open to conditions on AT&T/T-Mobile deal
Where does T-Mobile go from here for 4G?
Report: AT&T hires bank to explore $8B in asset sales on T-Mobile deal
Entner: Without AT&T, T-Mobile will be left to a slow death
What does the DOJ's suit mean for the AT&T/T-Mobile deal and beyond?
Department of Justice sues to block AT&T/T-Mobile deal

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