US moves to block AT&T takeover of T-Mobile

AT&T said it will “vigorously” fight the Justice
Department’s move to block its $39 billion
takeover of rival T-Mobile
© AFP/File Etienne Franchi

AFP

WASHINGTON (AFP) – The US Justice Department moved Wednesday to block US telecom giant AT&T’s $39 billion takeover of T-Mobile, saying it would be anti-competitive.

AT&T shares plunged 5.3 percent on Wall Street as the Justice Department said it had filed a lawsuit in US District Court here opposing the mega-merger.

“We are seeking to block this deal in order to maintain a vibrant and competitive marketplace,” Deputy Attorney General James Cole said at a news conference.

“Any way you look at this transaction it is anti-competitive,” added Sharis Pozen, acting assistant attorney general in charge of the Justice Department’s antitrust division.

AT&T general counsel Wayne Watts said the telecom giant was “surprised and disappointed” by the move and had received “no indication from the Department of Justice that this action was being contemplated” despite numerous meetings.

Watts said AT&T will challenge the Justice Department’s move in court.

“We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed,” Watts said. “The Department of Justice has the burden of proving alleged anti-competitive effects 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,” he said.

AT&T’s takeover of T-Mobile, the US unit of Germany’s Deutsche Telekom, had been expected to come in for tough regulatory scrutiny following criticism from some members of the US Congress and others.

But AT&T had been confident of getting the green light from the Justice Department’s antitrust lawyers and the transaction carries an exceptionally high “breakup fee” of $3 billion.

AT&T, T-Mobile, Sprint Nextel and Verizon provide more than 90 percent of the mobile wireless connections in the United States.

Verizon currently holds a 31-percent share of the US wireless subscriber market followed by AT&T with 27 percent.

Adding T-Mobile’s 37.3 million customers would give AT&T a 39-percent market share, putting it ahead of Verizon and Sprint Nextel, which had also expressed interest in acquiring T-Mobile.

The Justice Department said AT&T’s acquisition of T-Mobile “would eliminate a company that has been a disruptive force through low pricing and innovation.”

“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,” Cole said.

“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,” he said. “This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”

The US Federal Communications Commission had also been examining the deal.

FCC chairman Julius Genachowski said that although the process was not complete “the record before this agency also raises serious concerns about the impact of the proposed transaction on competition.

“Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile,” Genachowski said.