Added by Erik West on August 31, 2011
The U.S. Department of Justice Antitrust Division filed a civil antitrust lawsuit on Wednesday to block the acquisition of T-Mobile USA Inc by AT&T
The proposed merger, originally announced in March 2011 and worth approximately US$39bn, would result in the merged company controlling about 42% of the US mobile phone market, or about 129m subscribers, ranking it the largest in the US in terms of subscribers. Verizon, in contrast, currently has about 101m subscribers and Sprint has about 50m subscribers.
Special interest groups raised concerns that the deal would leave the US with only two major wireless carriers that control about 60% of the wireless market, or about 200m subscribers.
Harold Feld, legal director of Public Knowledge, a digital rights nonprofit at the time of the original announcement said, “You’re having the second- and fourth-biggest companies come together so they can totally cream the other guys, and when it comes down to it, what we’re talking about for consumers is prices. They will go up. And it’s not as if anybody else can suddenly come into the market and challenge these guys.”
In a statement, the U.S. Department of Justice acting Assistant Attorney General said, “T-Mobile has been an important source of competition among the national carriers through innovation and quality enhancements…it has also been an important source of price competition in the industry. Unless this merger is blocked, competition and innovation…will be diminished – and consumers will suffer.”
The U.S. Department of Justice said that it gave serious consideration to the efficiencies that AT&T claimed would result from the transaction. The department concluded AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers. In addition the U.S. Department of Justice said that AT&T could have the same network enhancements that it claims will come from the transaction, if it simply invested in its own network without eliminating a close competitor.