AT&T Responds To Justice Department Lawsuit

Lawyers for AT&T have filed their response to the U.S. Justice Department's antitrust suit that seeks to block the wireless carrier's acquisition of rival T-Mobile.

The document contends the government has failed to make its case that allowing AT&T and T-Mobile to merge will create a wireless monopoly that will harm consumers.

“The Complaint largely ignores the significant competition from established providers such as Verizon Wireless and Sprint, innovative upstarts such as MetroPCS and Leap/Cricket, and strong regional providers like US Cellular and Cellular South, among others,” the lawyers write.

“The Department does not and cannot explain how, in the face of all of these aggressive rivals, the combined AT&T/T-Mobile will have any ability or incentive to restrict output, raise prices, or slow innovation. Now can it explain how T-Mobile, the only major carrier to have actually lost subscribers in a robustly growing market, provides a unique competitive constraint on AT&T.”

Takes issue with government conclusion

The Justice Department suit noted that the proposed merger would create, by far, the U.S.'s largest wireless company, giving it and second largest Verizon dominance over the marketplace. As a result, the suit contends, service is likely to get more expensive for consumers. AT&T argues just the opposite.

“Blocking this transaction will not help T-Mobile or its customers, but the transfer of T-Mobile’s network capacity and infrastructure to AT&T, a healthy competitor, will enhance competition for all, now and in the future,” the document says.

AT&T argues that any anticompetitive effects of the merger are more than outweighed by significant efficiencies. AT&T further responds that the burden of proof is on the government that “the net effect of the transaction is to substantially lessen competition.”

There's a lot riding on the outcome. If AT&T loses it will not only lose the market share, bandwidth and customer accounts the T-Mobile deal would bring, it will also have to pay T-Mobile owner Deutsche Telekom a $3 billion fee and surrender some spectrum space to T-Mobile.