US Justice Department launches legal bid to block mobile takeover

Deputy Attorney General James M. Cole said that AT&T's proposed takeover of T-Mobile should not be able to proceed. The planned acquisition was first announced in March.

Cole said that the DOJ had filed an antitrust lawsuit to "ensure" the mobile telecoms market remains competitive and that "everyone ... continues to receive high quality, competitively priced mobile wireless products and services".

"The Department filed its lawsuit because we believe 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 their mobile wireless services," Cole said in a statement.

"Consumers across the country, including those in rural areas and those with lower incomes, have benefitted from competition among the nation’s wireless carriers, particularly the four remaining national carriers.   This lawsuit seeks to ensure that everyone can continue to reap the benefits of that competition," Cole said.

"Were the merger to proceed, there would only be three providers with 90 percent of the market, and competition among the remaining competitors on all dimensions – including price, quality, and innovation – would be diminished," he said.

In the US parties involved in major mergers or takeovers must comply with the Hart-Scott-Rodino Act (HSRA). Under the HSRA the parties must submit information about their business for review by the DOJ and Federal Trade Commission (FTC), the US' competition regulator.

Transactions cannot be completed until after the end of a set period in which the authorities conduct their investigations unless the US Government grants the completion of the deals earlier. The DOJ and FTC have the power to extend the period with which they can investigate deals, and can seek an injunction in federal district courts in order to prohibit a merger or takeover being concluded.

AT&T said it was "surprised and disappointed" with the DOJ's actions. It said it was prepared to challenge the DOJ in court.

"We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed," Wayne Watts, AT&T senior executive vice president and general counsel said in a statement.

"The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court," Watts said.

Watts said the merger would "help solve" the US' "spectrum exhaust situation", improve wireless and mobile broadband services for "millions" of US citizens and bring "billions of additional investment and tens of thousands of jobs" into the US economy.

The DOJ has “failed to acknowledge the robust competition in the U.S. wireless telecommunications industry and the tremendous efficiencies associated with the proposed transaction, which would lead to significant customer, shareholder and public benefits,” Deutsche Telekom, the German parent company of T-Mobile USA, said in a statement.

The DOJ said it had conducted "an exhaustive investigation" into the proposed takeover which it said produced "clear" results.

"We conducted dozens of interviews of customers and competitors, and we reviewed more than 1 million AT&T and T-Mobile documents," Acting Assistant Attorney General Sharis A. Pozen said in a statement.

"The conclusion we reached was clear. Any way you look at this transaction, it is anticompetitive," Pozen said.

If completed the proposed £39bn deal would result in AT&T commanding 42% of the mobile phone service market, with Verizon accounting for 28% of the market and Sprint 12%, according to a report by the Hastings Law Journal. Regional providers account for the remainder of the market share, the report said.