Sign in with
Sign up | Sign in

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

By - Source: DOJ | B 46 comments

The U.S. government has filed to block AT&T's attempt to acquire rival T-Mobile.

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.

Display 46 Comments.
This thread is closed for comments
Top Comments
  • 23 Hide
    scook9 , August 31, 2011 7:30 PM
    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.....
  • 19 Hide
    skaz , August 31, 2011 7:49 PM
    +1 for the gov.
  • 14 Hide
    Hellbound , August 31, 2011 7:26 PM
    With more competitors comes more competition, normally, meaning lower prices. My instinct tells me ATT acquiring Tmobile wont be a good thing..
Other Comments
  • 7 Hide
    Azn Cracker , August 31, 2011 7:07 PM
    I have T-Mobile right now... Please don't take it away!
  • 14 Hide
    Hellbound , August 31, 2011 7:26 PM
    With more competitors comes more competition, normally, meaning lower prices. My instinct tells me ATT acquiring Tmobile wont be a good thing..
  • 23 Hide
    scook9 , August 31, 2011 7:30 PM
    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.....
  • -7 Hide
    cirdecus , August 31, 2011 7:32 PM
    I don't see a duopoly as a reason for DOJ to step in. It's not like Verizon wouldn't compete with the unified ATT and T-Mobile company.

    It shouldn't be ATT's fault that Verizon exists. This argument should be whether or not Verizon can stay competitive against ATT instead of whether other companies can stay competitive with the TWO of them.

    If they're really aiming to make sure 2 companies cannot be dominate in a market, how come they haven't stepped in on:

    UFC (purchased Strikeforce), monopoly in the MMA sport
    Nvidia and ATI (only 2 mainstream graphics entities)
    Intel and AMD
    etc
    etc
    etc


    This decision makes no sense. As long as there is an equally strong competitor, DOJ needs to step back and let the market work.
  • 3 Hide
    Anonymous , August 31, 2011 7:34 PM
    After the meger there wouldn't be a T-Mobile from what I understand. The change might not be immediate but eventually everyone would be merged into AT&T. The infrastructure would be combined so that both AT&T and current T-Mobile uses would be using the same network.
  • 4 Hide
    scook9 , August 31, 2011 7:36 PM
    CirdecusI don't see a duopoly as a reason for DOJ to step in. It's not like Verizon wouldn't compete with the unified ATT and T-Mobile company.It shouldn't be ATT's fault that Verizon exists. This argument should be whether or not Verizon can stay competitive against ATT instead of whether other companies can stay competitive with the TWO of them.If they're really aiming to make sure 2 companies cannot be dominate in a market, how come they haven't stepped in on:UFC (purchased Strikeforce), monopoly in the MMA sportNvidia and ATI (only 2 mainstream graphics entities)Intel and AMDetcetcetcThis decision makes no sense. As long as there is an equally strong competitor, DOJ needs to step back and let the market work.

    If left alone businesses will do what is good for business which is never good for the customer/voter/tax payer/citizen. The government is there to protect the customer and their rights. You can call it socialism if you want but when done right the only people it hurts are the elite top of the top rich people, just about everyone (aka 99.99%) benefits considerably - and the rich can still be rich by the way. Or should we just go "hands off" let telco's end up like the banks and have to throw nearly a trillion dollars at them to clean up their mess?
  • 2 Hide
    jprahman , August 31, 2011 7:37 PM
    Wasn't there a story a few days back about how Verizon was petitioning the White House to do something about Apple patent lawsuits against Android? I don't know if that will happen but at least the government helped them out with this.
  • 7 Hide
    Nesto1000 , August 31, 2011 7:42 PM
    CirdecusI don't see a duopoly as a reason for DOJ to step in. It's not like Verizon wouldn't compete with the unified ATT and T-Mobile company.It shouldn't be ATT's fault that Verizon exists. This argument should be whether or not Verizon can stay competitive against ATT instead of whether other companies can stay competitive with the TWO of them.If they're really aiming to make sure 2 companies cannot be dominate in a market, how come they haven't stepped in on:UFC (purchased Strikeforce), monopoly in the MMA sportNvidia and ATI (only 2 mainstream graphics entities)Intel and AMDetcetcetcThis decision makes no sense. As long as there is an equally strong competitor, DOJ needs to step back and let the market work.


    ATT and T-Mobile GSM
    Verzion and Sprint CDMA

    ATT would create a monopoly over GSM phones in the US, and considering that most phones outside of the US are GSM, I wouldn't like to be stuck with ATT if I acquire a phone overseas.
  • 19 Hide
    skaz , August 31, 2011 7:49 PM
    +1 for the gov.
  • 5 Hide
    ivan_chess , August 31, 2011 8:00 PM
    Didn't Verizon acquire Alltel a while ago and the only concession they had to make was giving the Mid-Western Alltel branch to ATT?
  • -5 Hide
    jblack , August 31, 2011 8:02 PM
    scook9Can you please explain how having less companies competing for business is better for the consumer?


    There would be less towers needed in an area for coverage. The problem is that businesses are greedy and generally less competition means consumers end up paying more. I wouldn't have a problem with a monopoly if they'd keep the prices low.
  • 0 Hide
    bhaberle , August 31, 2011 8:19 PM
    Woot. Go sneak that shi!t now Sprint. Who cares if you use two completely different technologies that would make it even more costly to combine. I want the option to use sim cards!
  • 4 Hide
    gallidorn , August 31, 2011 8:22 PM
    It is sad to think that AT&T does little to nothing to improve their cell phone reception or coverage, unless it means purchasing another company.

    If they were able to purchase T-Mobile, it wouldn't mean better coverage, because they would consolidate the cell towers and close stores to increase their profit margins. This is simply an attempt to get rid of the competition and acquire T-Mobile's customers.

    It's all about the $$$$$
  • 2 Hide
    Marthian , August 31, 2011 8:25 PM
    Thank goodness. I would hate for less options to be available. AT&T is already greedy enough and a bunch of deceitful liars.
  • 4 Hide
    scook9 , August 31, 2011 8:26 PM
    AnUnusedUsernameThe problem here is that it's a lot like electrical or water companies. There's no reason to have duplicate network infrastructure, and there's only so much "space" for wireless data. It would be a lot more efficient to only have one company. Of course, a single company would charge whatever it wanted to, but it would be more efficient than multiple companies doing the exact same thing. How many places have two, three, or more sets of water pipes to the same houses? It doesn't make sense there, and likewise makes little sense for wireless carriers.

    There is nothing stopping companies from leasing tower space from other people/companies....which already happens most of the time by the way. You think Verizon owns all its towers? No, it just owns the equipment hanging off of them, right next to other telco's equipment because both of those companies are leasing tower space off of a 3rd company
Display more comments
Tom’s guide in the world
  • Germany
  • France
  • Italy
  • Ireland
  • UK
Follow Tom’s guide
Subscribe to our newsletter