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Telecommunications industry

Justice Department Blocks AT&T's $39 Billion Acquisition of T-Mobile

Strategic Insights

— 1 min read

Democratic lawmakers have welcomed the Justice Department's lawsuit to block AT&T's proposed $39 billion acquisition of T-Mobile USA Inc., arguing that the combination would reduce competition and hurt consumers. The department's antitrust division claims that the deal would eliminate T-Mobile as an independent competitive constraint, leading to higher prices, diminished investment, and less product variety and innovation. AT&T and Deutsche Telekom, the German company that currently owns T-Mobile, have vowed to fight the Justice Department in court.

Key Takeaways:

  • The Justice Department's lawsuit alleges that the acquisition would reduce competition for mobile wireless telecommunications and harm consumers.
  • The department's antitrust division claims that the deal would eliminate T-Mobile as an independent competitive constraint, increasing concentration in local markets and reducing competition nationwide.
  • AT&T and Deutsche Telekom have announced their intention to contest the lawsuit in court, with AT&T seeking an expedited hearing to review the merger's benefits.
  • Top Democrats, including Rep. Herb Kohl and Rep. Edward J. Markey, have welcomed the Justice Department's action, arguing that preserving competition benefits consumers.
  • Industry response includes public policy advocates who oppose the merger, such as Harold Feld, legal director at Public Knowledge, who expects the Federal Communications Commission (FCC) to take a harder line against the deal.

Statistics:

  • The proposed acquisition of T-Mobile by AT&T is valued at $39 billion.
  • The Justice Department's lawsuit claims that the deal would reduce competition for mobile wireless telecommunications.
  • 5,000 call center jobs are expected to be brought back to the U.S. if the merger is consummated.
  • The Federal Communications Commission (FCC) is reviewing the deal under a broader "public interest" standard.
  • Deutsche Telekom currently owns T-Mobile and plans to join AT&T in contesting the Justice Department's lawsuit.

Sources:

  • CQ Today Round-the-clock coverage of news from Capitol Hill. [c]2011 Congressional Quarterly Inc. All Rights Reserved.

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