Moving far more quickly than the Federal Communications Commission, rejecting AT&T’s promises of more rapid wireless broadband development and the carrier’s unprecedented public relations campaign, the Department of Justice today filed a civil antitrust lawsuit to block AT&T’s proposed acquisition of T-Mobile USA Inc. Two points in DoJ’s press release of particular note include the following:
The department said that the proposed $39 billion transaction would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting 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.
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.
DoJ’s decision is a stunning and potentially costly defeat for AT&T ( it agreed to a $3.0 Billion break-up fee, plus spectrum assignments), and a major legal victory for Sprint. On the other hand, that DoJ is opposing the combination of the 2nd and 4th largest Wireless carriers in a growing, but highly concentrated, industry subject to increasing economies of scale and scope is not surprising. DoJ’s action increases substantially the likelihood of the FCC reaching the same conclusion, assuming AT&T and T-Mobile do not first withdraw their request for the FCC’s consent to the transaction.