Sprint Joins DOJ in Filing Lawsuits to Block AT&T, T-Mobile Merger

Posted by at 12:27 pm on September 6, 2011

Sprint decided to seize the opportunity of the DOJ lawsuit against AT&T and T-Mobile on Tuesday by suing the two carriers itself. The DC-based lawsuit accuses the rival carriers of violating Section 7 in the Clayton Antitrust Act. A merger would “entrench the duopoly control” of AT&T and Verizon, Sprint said, giving them over three quarters of the cellphone market.

Further arguments touched on those points Sprint has used in earlier testimony or formal complaints, such as that it would let AT&T squeeze its network or discourage device deals with smaller networks.

In spite of claims to the contrary, prices would likely go up, Sprint said.

“Sprint opposes AT&T’s proposed takeover of T-Mobile,” said Susan Z. Haller, vice president-Litigation, Sprint. “With today’s legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal.”

Sprint’s lawsuit focuses on the competitive and consumer harms which would result from a takeover of T-Mobile by AT&T. The proposed takeover would:

  • Harm retail consumers and corporate customers by causing higher prices and less innovation.
  • Entrench the duopoly control of AT&T and Verizon, the two “Ma Bell” descendants, of the almost one-quarter of a trillion dollar wireless market. As a result of the transaction, AT&T and Verizon would control more than three-quarters of that market and 90 percent of the profits.
  •  Harm Sprint and the other independent wireless carriers. If the transaction were to be allowed, a combined AT&T and T-Mobile would have the ability to use its control over backhaul, roaming and spectrum, and its increased market position to exclude competitors, raise their costs, restrict their access to handsets, damage their businesses and ultimately to lessen competition.

AT&T has always rejected the accusations and has tried to assuage features of what would happen, albeit with little success. It always states that there would still be ample competition, citing four or five carriers in most areas, but often consciously omits the much smaller market share and regional nature of many of the companies. AT&T may have also inadvertently sabotaged its own case after it unintentionally posted an unredacted filing that showed it only needed $3.8 billion to reach 95 to 97 percent of the US with LTE, not the $39 billion acquisition of T-Mobile.

Both AT&T and T-Mobile are expected to contest the Sprint lawsuit and refute its claims. T-Mobile may have the strongest reason of all given that clauses might exist that could deny it $6 billion in total break-up payouts, leaving it both without a corporate savior and cash to boost its fortunes.

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