AT&T’s proposed $39 billion merger with rival wireless provider T-Mobile has met opposition from federal antitrust regulators. The Department of Justice on Wednesday filed a lawsuit against AT&T to block the merger with T-Mobile. The Department of Justice officials said in the lawsuit that they are concerned that the resulting merger would be bad for consumers by concentrating too much of the wireless market in too few companies.
The DOJ says that the deal would result in 78 percent of wireless profits to be concentrated in two companies — AT&T and Verizon. AT&T is the second largest wireless provider with 98 million customers, behind Verizon. T-Mobile is the fourth largest company. The combined AT&T/T-Mobile and Verizon would serve two-thirds of wireless customers in the country. The DOJ said that they believed this could result in higher prices for consumers with fewer options and lower quality services.
The lawsuit does not mean that the merger will not happen eventually, but it means AT&T and T-Mobile face an uphill battle in seeing it approved. AT&T insists that the merger would be good for its customers by expanding the 4G service area and to effectively compete with Verizon.
The Department of Justice is skeptical that the companies need to combine in order to expand the networks. AT&T will continue to try to convince the DOJ that it is a good deal and work towards a settlement with the federal agency. The FCC will also have to approve the merger before it can happen.
Source: WSBTV, “DOJ Moves to Block AT&T Merger With T-Mobile,” David Goldman, Aug. 31, 2011