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US DoJ sues AT&T over T-Mobile USA buyout

Wants to preserve competition
Thu Sep 01 2011, 10:53

AGGRESSIVE US TELECOMS GIANT AT&T has suffered a blow to its plans to take over T-Mobile USA, as the US Department of Justice (DoJ) has sued the company to block the deal.

Earlier this year AT&T announced its plan to purchase Deutsche Telekom's T-Mobile USA for $39bn, a move that would cut the number of US mobile operators down to three. Since then AT&T has lobbied for public and political support, repeatedly saying that the deal would be good for customers, even if it meant some of them would only have the option of AT&T, and it even sued the law firms that represented customers who oppose the merger.

Now the US DoJ has filed an antitrust lawsuit against AT&T over the merger, claiming that any deal would "substantially lessen competition" in the US wireless market. It added that "AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market," something that most US customers might say is stating the bleedin' obvious.

AT&T on the other hand seems to have been caught off guard, with Wayne Watts, AT&T's general counsel telling Bloomberg, "We have met repeatedly with the DoJ and there was no indication from the DoJ that this action was being contemplated." T-Mobile's parent firm was a little more forceful in its statement, saying, "[The] DoJ failed to acknowledge the robust competition in the U.S. wireless telecommunications industry and the tremendous efficiencies associated with the proposed transaction."

The DoJ antitrust suit essentially forces AT&T and T-Mobile to negotiate with the DoJ, which has final approval of all US mergers. AT&T's initial bid for T-Mobile USA included a cancellation fee of $3bn, so there is plenty of incentive for the firms to sit around the table and hammer something out.

While AT&T's plan to overtake Verizon by buying T-Mobile isn't dead, the DoJ's decision to file an antitrust lawsuit is a major setback and might scuttle the deal. µ

 

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