Wednesday, August 31, 2011

U.S. Government to Block AT&T/T-Mobile Merger

According to Bloomberg, the United States Justice Department has just filed papers in Washington to block the proposed AT&T/T-Mobile merger despite the fact that AT&T and T-Mobile are pledging 5,000 new jobs if the merger were approved. The Justice Department says the merger would "substantially lessen competition" among wireless carriers. If the merger falls through, AT&T would owe T-Mobile $3 billion.

The FCC has responded with the following statement:

"Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition."

AT&T also responded:

"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. At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will:

· Help solve our nation's spectrum exhaust situation and improve wireless service for millions.
· Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population;
· Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.

We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court.

T-Mobile's statement:

On August 31, 2011, the United States Department of Justice (DOJ) informed Deutsche Telekom that it will file a complaint in the U.S. District Court for the District of Columbia seeking a permanent injunction blocking the proposed stock purchase agreement between AT&T and Deutsche Telekom under which AT&T will acquire T-Mobile USA from Deutsche Telekom.

The Company is very disappointed by the DOJ's action, and will join AT& T in defending the contemplated merger against the complaint in court. DOJ 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. We appreciate the DoJ's willingness to discuss possible remedies to address the competitive concerns.

And this post would not be complete without Sprint's statement:

"The DOJ today delivered a decisive victory for consumers, competition and our country. By filing suit to block AT&T's proposed takeover of T-Mobile, the DOJ has put consumers' interests first. Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision – one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry. Contrary to AT&T's assertions, today's action will preserve American jobs, strengthen the American economy, and encourage innovation."

AT&T and T-Mobile are both disappointed and argue that there are plenty of other small, budget carriers for Americans to choose from, while Sprint, and more importantly the Department of Justice, think otherwise.

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