Sprint Sues To Block AT&T/T-Mobile Deal

The competitor with perhaps the most at stake in a merger of AT&T and T-Mobile has gone to court to try and stop the deal in its tracks.

Sprint/Nextel has filed suit in U.S. District Court in the District of Columbia in a bid to stop the proposed $39 billion acquisition from taking place. It joins the U.S. Justice Department, which filed a similar suit, in arguing the proposed union of the nation's second and third largest mobile companies is anti-competitive.

Sprint/Nextel, which would become the third-largest mobile company behind AT&T and Verizon Wireless -- and with a much smaller piece of the pie proportionally -- said the deal would take the industry back to the 1980s, when just two firms dominated the industry, and consumers paid high prices.

"By acquiring T-Mobile, AT&T would be removing a low-price and innovative maverick competitor that provides particularly disruptive competition," Sprint argued in the suit. "The injuries to Sprint and the public at large would be irreparable if the merger were completed."

Echoing the government

Sprint made many of the same arguments against the deal as voiced by the government in last week's suit. In its suit, the government pointed out that mobile wireless telecommunications services play a critical role in the way Americans live and work, with more than 300 million feature phones, smart phones, data cards, tablets and other mobile wireless devices in service today.

Four nationwide providers of these services – AT&T, T-Mobile, Sprint and Verizon – account for more than 90 percent of mobile wireless connections. The proposed acquisition would combine two of those four, eliminating from the market T-Mobile, a firm that historically has been a value provider, offering particularly aggressive pricing, DOJ said.

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.“Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”

The department said that it gave serious consideration to the efficiencies that the merging parties claim would result from the transaction but 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.

AT&T has argued that the merger would actually benefit consumers, saying it would allow the combined companies to more quickly expand wireless broadband services across the U.S.