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Eric Krapf
Eric Krapf is General Manager and Program Co-Chair for Enterprise Connect, the leading conference/exhibition and online events brand in the...
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Eric Krapf | August 31, 2011 |

 
   

DoJ Seeks to Block AT&T/T-Mobile Merger (Update 1)

DoJ Seeks to Block AT&T/T-Mobile Merger (Update 1) Justice Department cites reduced competition if the $39 billion deal goes through.

Justice Department cites reduced competition if the $39 billion deal goes through.

The U.S. Department of Justice will attempt to block AT&T's acquisition of T-Mobile, Bloomberg is reporting. We'll have analysis here as this story develops.

Update 1: From the DoJ press release:

"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. "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."

"T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network," said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."

DoJ notes that AT&T and T-Mobile are two of the four companies (along with Verizon and Sprint) that account for 90% of the market share for mobile wireless service in the U.S. They also note that AT&T and T-Mobile compete head to head in 97 of the top 100 markets in the U.S.

The DoJ also cites instances where it says AT&T had acknowledged that competitive pressure from T-Mobile drove it to react with initiatives in its own services.

Finally, DoJ's release says of the potential benefits of the merger:

The department said that it gave serious consideration to the efficiencies that the merging parties claim would result from the transaction. The department concluded AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction's substantial adverse impact on competition and consumers. Moreover, the department said that AT&T could obtain substantially the same network enhancements that it claims will come from the transaction if it simply invested in its own network without eliminating a close competitor.





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