The U.S. government has filed an antitrust suit to block telecom giant AT&T Inc.'s acquisition of rival T-Mobile USA, saying the takeover deal would “substantially lessen competition” in the U.S. wireless market.
AT&T had agreed to buy the firm from Deutsche Telekom AG in March for $39 billion, aiming to create the largest U.S. wireless network. The takeover would give AT&T about 43 percent of the U.S. mobile phone market, Forbes says.
But the U.S. Department of Justice says the merger would break antitrust laws and is seeking a court order to stop it from going ahead, the Wall Street Journal reports.
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“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the Justice Department said in its complaint filed today in federal court in Washington, Bloomberg reports.
The deal cannot go ahead without approval from the Justice Department and the Federal Communications Commission (FCC).
"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," said Deputy Attorney General James M. Cole, according to the BBC.
"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."
Rival firms including Sprint have argued that the AT&T and T-Mobile merger would hurt competition.
AT&T had pledged to bring 5,000 wireless call-center jobs back to the United States from overseas if regulators approved the deal, Reuters says. The company had also promised that the merger would not result in any job losses for American call center employees from Dallas-based AT&T and Bellevue, Washington-based T-Mobile USA.