AT&T may be working hard insisting that it's in users' best interest for the T-Mobile acquisition to go ahead, but it's a long way from convincing regulators. The Department of Justice has filed an antitrust complaint in an attempt to block the merger, Bloomberg reports, arguing that it would "substantially lessen competition" in the US wireless market. Meanwhile, the FCC has waded in as well, with chairman Julius Genachowski revealing that the agency also has "serious concerns" about the deal.
"AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market" the DOJ complaint alleges. That would result "in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives."
It's a similar refrain from the FCC, with the chairman voicing his own concerns. According to a statement passed to This is my next:
"By filing suit today, the Department of Justice has concluded that AT&T’s acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws. Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is 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. Competition fosters consumer benefits, including more choices, better service and lower prices" Julius Genachowski, chairman, FCC
If blocked, the scuppered merger would have serious financial implications for AT&T. The carrier is liable for $3bn in breakup fees payable to T-Mobile USA should the deal not go ahead, along with handing over a chunk of spectrum and reduced incoming call fees that together have been valued at up to $4bn more. In response, AT&T claims the acquisition will aid the ailing economy and create jobs in the US.
In fact, those jobs would primarily be call center work, returned to the US from AT&T'S current outsourcing. It has also promised that the merger would not result in any AT&T or T-Mobile call center redundancies. Earlier this month, the FCC revealed it would be examining the T-Mobile deal and the Qualcomm spectrum acquisition in tandem, though it's unclear what impact this new complaint might have on the latter.
Update: AT&T has issued the following statement:
"We are surprised and disappointed by today's action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated. We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court" Wayne Watts, General Counsel, AT&T