Wednesday, August 31, 2011

Justice Dept. to block AT&T's T-Mobile deal

The U.S. Department of Justice has filed a petition with a federal court in Washington, D.C. to block AT&T's proposed takeover of T-Mobile USA.
The Justice Department said that the deal would "substantially lessen competition" in the wireless industry, and thus, should be blocked from approval. The government organization said that if the deal was approved, it would violate U.S. antitrust laws, and potentially cause "higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives."
"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," Deputy Attorney General James M. Cole said in a statement. "Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition."
Bloomberg was first to report on the news.
Earlier this year, AT&T announced its plans to acquire T-Mobile USA from Deutsche Telekom in a deal valued at $39 billion. As soon as the deal was announced, critics immediately chimed in, saying that it could stifle competition in the marketplace and ultimately hurt both consumers and competitors. Sprint, which would have been dwarfed by the combined AT&T and T-Mobile, was especially outspoken on the deal, saying that it would fight it to the end.
"Sprint urges the United States government to block this anticompetitive acquisition," the company said in a statement following the announcement of the deal. "This transaction will harm consumers and harm competition at a time when this country can least afford it. So on behalf of our customers, our industry, and our country, Sprint will fight this attempt by AT&T to undo the progress of the past 25 years and create a new Ma Bell duopoly."
However, both the Federal Communications Commission and the Department of Justice continued their review of the deal, and were expected to make their decision on the merger early next year. The fact that the Justice Department has already filed a petition against the deal is somewhat of a surprise

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