Government Files to Block AT&T's T-Mobile Acquisition

You might remember back in March when AT&T announced plans to acquire T-Mobile in a deal worth $39 billion in cash and stocks. As per the agreement, Deutsche Telecom would receive an equity stake in AT&T that would give the German company an ownership interest in AT&T of approximately 8 percent. A Deutsche Telekom rep would also take up residence on the AT&T board of directors. As with all acquisitions, the announcement from AT&T included a line or two about the deal being subject to usual regulatory checks. While that's not usually a problem for the majority of deals, this one is a big fish that would see two of the nation's top carriers become one. Problem? Yes. Today, the U.S. government threw a spanner in the works with a filing aimed to block the deal.

Bloomberg reports that the U.S. Department of Justice is suing to block the deal on the grounds that if it went ahead, it would "substantially lessen competition" and violate antitrust laws.

"We conducted dozens of interviews of customers and competitors, and we reviewed more than 1 million AT&T and T-Mobile documents," the Department of Justice said in a prepared statement today. "The conclusion we reached was clear. Any way you look at this transaction, it is anticompetitive. Our action today seeks to ensure that our nation enjoys the competitive wireless industry it deserves."

The DOJ went on to praise T-Mobile for its innovation and ability to generate competition in the mobile space, highlighting the fact that T-Mobile was the first to roll out HSPA+ and the first with Android.

"Unless this merger is blocked, competition and innovation in the mobile wireless market, in the form of low prices and innovative wireless handsets, operating systems, and calling plans, will be diminished—and consumers will suffer," the Department added.

Of course, this is bad news for AT&T (the company's stock is down roughly 4.5% at time of writing). AT&T this afternoon released a statement regarding the suit and indicated that it had no idea the DoJ was thinking of putting the breaks on its $40 billion deal.

We are surprised and disappointed by today's action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated. We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court. We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.

Read the full complaint from the Deparment of Justice here (PDF) or check out the department's press briefing here.

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  • soldier37Purely a political move by the Obama regime. T Mobile is a third place network. Sprint will be next to get eaten up. This merger will happen one way or another. Its inevitable. Oh and Iphone 5 on AT&T ftw. Unlimited data plan - check..... Verizon - capped.

    Cute comment but.....

    AT&T does not offer unlimited data any more, just like Verizon does not. Both are capped unless you are grandfathered in. The "obama regime" has nothing to do with it. Can you please explain how having less companies competing for business is better for the consumer?

    I have heard of android and apple fanboys....but this is my first AT&T fanboy.....
  • +1 for the gov.
  • With more competitors comes more competition, normally, meaning lower prices. My instinct tells me ATT acquiring Tmobile wont be a good thing..
  • Other Comments
  • I have T-Mobile right now... Please don't take it away!
  • Azn CrackerI have T-Mobile right now... Please don't take it away!

    There still would be T-Mobile but it would be ran by AT&T. I could be wrong but you wouldnt have to pay for a whole new 2 year with AT&T or anything.

    I have AT&T and i really was hoping it went through but with this news i really dont know anymore.
  • With more competitors comes more competition, normally, meaning lower prices. My instinct tells me ATT acquiring Tmobile wont be a good thing..