Seven sates joined a DOJ lawsuit aiming to block T-Mobile and AT&T

29th September, 2011 by adina
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There is increased resistance to AT&T’s buyout of T-Mobile after seven states recently joined the DOJ lawsuit intending to lock the proposed deal. Washington, Pennsylvania, Ohio, New York, Massachusetts, Illinois and California all agreed that such a merger would reduce competition. Officials from the Department of Justice were very pleased to receive this kind of support and reiterated their assumption that the deal would hurt the United States.

The DOJ promised to protect consumers from the anticompetitive behavior that could result from a transaction of this kind.

AT&T, like in every occasion it has faced opposition to the lawsuit, downplayed the importance of the deal. As the carrier said, such involvement was not uncommon for states, no matter what the deal was. AT&T even went further by trying to demonstrate its numeric advantage given to it by eleven state attorneys general as well as many officials belonging to the federal or local level who were backing the deal.

Even the Democrats, through the voice of fifteen Congress members, supported the company.

Of course there are lawsuits that oppose mergers in the United States, but they occur for a quite small minority of proposed mergers and usually mean there is a possibility for the merger to be denied outright. According to AT&T, the company would negotiate a settlement, but the existence of the lawsuit signifies the Department of Justice does not believe that an amount of divested network areas or some price guarantees could resolve the problem.

Much of the recent action appeared a short time after AT&T posted a version of a filing saying that it needed only $3.8 billion to attain the 95 to 97 percent of LTE coverage the company had promised with the merger. The carrier has officially declared that it still needed to spend about ten times more in order to eliminate one of its major competitors that had the same goal. However, it has never mentioned the direct implications of either having made false statements about its initial needs for LTE or of the necessity of the merger.

AT&T and T-Mobile were also sued by Sprint because it would have to struggle against a rival having majority market share and significantly more control over elements like prices, device choice or network rates.


     

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