LOS ANGELES — The Justice Department is seeking to
block AT&T Inc.’s $39 billion plan to buy T-Mobile USA Inc.,
claiming that combining the two wireless giants could stymie competition
and innovation.
The agency filed a civil
antitrust lawsuit Wednesday morning in federal court in Washington that
would prevent AT&T, which has the second-largest subscriber base in
the country, from acquiring fourth-largest T-Mobile.
The
deal, according to the Justice Department, would displace Verizon
Wireless as the largest wireless carrier in the U.S., leading to higher
prices, lower-quality services, a smaller pool of choices and fewer
pioneering technologies for millions of Americans.
Consumers
in rural areas or with lower incomes would be especially hard-hit,
Deputy Attorney General James M. Cole said in a statement.
AT&T
said it was “surprised and disappointed” by the Justice Department’s
move, saying that it had met often with the agency to work over the
potential pitfalls of the deal. The company said it planned to
“vigorously contest this matter in court” and intended to request an
expedited hearing to review the “enormous benefits” of the acquisition.
Wayne
Watts, the company’s senior executive vice president, said in a
statement that the deal, announced in March, “is in the best interest of
consumers” and could help improve wireless service for millions.
The
proposed purchase had sparked heavy protests from consumer groups and
rival telecom companies. With more than 300 million phones, tablets and
other mobile wireless devices in service across the country, AT&T,
T-Mobile, Sprint and Verizon dominate more than 90 percent of the
market, the government said.
Taking T-Mobile out
of play would eliminate Dallas-based AT&T’s need to compete on
operational efficiency and aggressive pricing, the Justice Department
said. T-Mobile is based in Bellevue, Wash. and is owned by German
company Deutsche Telekom AG.
“This ought not to be
a big surprise,” the nonprofit law firm Media Access Project said in a
statement. “This is arguably the most anti-competitive move in recent
American economic history. It is heartening that the Department of
Justice has withstood withering political pressure from AT&T to do
the right thing for the American public.”
After
asking AT&T and T-Mobile for more information about the competitive
concerns, the Federal Communications Commission last week continued its
review of the proposed takeover. Though the consideration process is
still incomplete, Chairman Julius Genachowski said Wednesday that what
his agency has seen so far “also raises serious concerns.”
“Vibrant
competition in wireless services is vital to innovation, investment,
economic growth and job creation, and to drive our global leadership in
mobile,” he said in a statement.
Earlier in the
day, AT&T announced that it would repatriate 5,000 call-center jobs
to the United States that had been outsourced overseas if the takeover
of T-Mobile goes through.
“At a time when many
Americans are struggling and our economy faces significant challenges,
we’re pleased the T-Mobile merger allows us to bring 5,000 jobs back to
the United States and significantly increase our investment here,” said
Randall Stephenson, AT&T chairman and chief executive.
Stephenson’s statement was applauded by labor union leaders.
“Cuts
in wages, benefits and jobs have become the new normal in America, so
that when a company like AT&T takes action to bring back quality
jobs, it’s big news,” said Larry Cohen, president of the Communications
Workers of America union.
The proposed merger is
being studied by the FCC. The California Public Utilities Commission
also is investigating the pros and cons of the proposed deal.
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©2011 the Los Angeles Times
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