DOJ sues to stop giant telecom merger

Tina Nguyen Contributor
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In a move that stunned tech-watchers and telecommunications analysts Wednesday, the Department of Justice filed an antitrust lawsuit to block the proposed AT&T/T-Mobile merger, effectively halting the process.

Deputy Attorney General James Cole cited the potential monopoly created by the merger of two of the top four wireless carriers in the country, and the resulting impact on consumers.

“The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Cole in a press conference earlier today.  The DOJ’s Antitrust Division is responsible for reviewing potential mergers in order to prevent internal collusion.

Upon learning of this lawsuit, the Federal Communications Commission, which must approve the proposed merger on a competitive basis, voiced its renewed concerns.

“Competition is an essential component of the FCC’s statutory public interest analysis,” said Chairman Julius Genachowski in a statement.  “Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. “

Though AT&T had pledged to bring 5,000 call center jobs to the US this morning prior to this announcement, that act of goodwill seemed to have no effect on its market share: Prices for AT&T stocks plunged upon the lawsuit’s announcement, becoming the single worst S&P 500 performer. Sprint PCS, a top wireless market performer which had prominently opposed the merger, saw its stock price jump.

Neither AT&T nor Sprint could be reached for comment at the time of publication.

Update (12:05 PM):  AT&T’s Senior VP and General Counsel Wayne Watts stated that he and the company were “surprised and disappointed” by the DOJ’s announcement, and plans to “vigorously” contest the suit in court.

“We have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated,” said Watts.   “At the end of the day, we believe facts will guide any final decision and the facts are clear…we remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.”

Update (1:10 PM):  Vonya McCann from Sprint calls today’s filing a “decisive victory” for consumers and the economy.

“Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision – one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry. Contrary to AT&T’s assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”

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