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Justice Department sues to block AT&T takeover of T-Mobile [Updated]

August 31, 2011 |  8:40 am

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The U.S. Department of Justice has filed an antitrust lawsuit seeking to block AT&T Inc.'s proposed $39-billion takeover of T-Mobile USA, arguing that the blockbuster purchase would result in a "significant loss of competition."

The Justice Department's complaint was filed Wednesday morning in federal court in Washington, D.C., and asks for a court order that would prevent the nation's second-largest wireless carrier, AT&T, from buying and operating the fourth-largest carrier, T-Mobile USA. 

Document: Read the antitrust lawsuit Consolidation: Graphic on the proposed AT&T purchase of T-Mobile

In the civil complaint, the department said that not only competition among wireless carriers would be lessened, but prices would rise, consumers would face poorer quality services and fewer innovative products could be produced as well. Bloomberg was among the first to report on the suit.

If the Justice Department wins its push to prevent AT&T from buying T-Mobile USA, AT&T would have to pay Deutsche Telekom, T-Mobile's German parent company, $3 billion.

AT&T and T-Mobile officials were unavailable for comment Wednesday morning.

"T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network," said Sharis A. Pozen, acting assistant attorney general in charge of the Department of Justice's antitrust division, in a statement. "Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."

[Updated 9:01 a.m.: Federal Communications Commission chairman Julius Genachowski emailed along this statement in reaction to the Justice Department suit, saying that the FCC also has "serious concerns about the impact" of AT&T takeover of T-Mobile.

"By filing suit today, the Department of Justice has concluded that AT&T's acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws," Genachowski said. "Competition is an essential component of the FCC's statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices."]

[Updated 9:13 a.m.: The Consumers Union, publisher of Consumer Reports magazine, emailed along a statement from Parul P. Desai, who handles policy counsel at the group, applauding the Justice Department's suit.

"This announcement is something for consumers to celebrate," Desai said. "We have consistently warned that eliminating T-Mobile as a low-cost option will raise prices, lower choices, and turn the cellular market into a duopoly controlled by AT&T and Verizon. The lawsuit filed by DOJ today proves that it has serious concerns and believes the best way to protect millions of consumers nationwide is by blocking the merger."

The Consumers Union also said that a price analysis of the voice and data plans offered by AT&T and T-Mobile that it conducted found that T-Mobile wireless plans normally cost $15 to $50 less per month than comparable plans from AT&T.]

RELATED:

AT&T agrees to buy T-Mobile USA, creating U.S. wireless giant

FCC to review AT&T deals with T-Mobile and Qualcomm together

FCC restarts 180-day clock for review of AT&T's takeover of T-Mobile

-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: The AT&T logo at a RadioShack store in Gloucester, Mass. Credit: Lisa Poole/Associated Press

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