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“AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market." -- U.S. DOJ  (Source: Miramax Films)
U.S. Justice Department says combined company would break antitrust laws

AT&T Inc.'s (T) bid to acquire to rival U.S. carrier Deutsche Telekom AG's (ETR:DTE) T-Mobile USA may have slammed into a roadblock today, with Bloomberg reporting that the U.S. Department of Justice had filed paperwork to block the acquisition. 

Back in March, AT&T first announced its intentions to purchase T-Mobile for a whopping $39 billion USD ($25 billion USD in cash, the remainder in stock).  Reportedly AT&T had been negotiating the purchase behind closed doors since January.

The deal would mark the latest consolidation in the race by America's top carriers Verizon Communications
, Inc. (VZ) and AT&T to gobble up would-be competitors.  Had the deal been approved it would have granted AT&T and Verizon control over more than 80 percent of American cell phone contracts -- a "duopoly" according to some.  AT&T would have approximately 130 million subscribers, while Verizon would have 97 million subscribers.

Verizon and AT&T often marched in lock step when it came to pricing and contract terms, as witnessed by both companies' decisions to kill "unlimited" smart phone internet privileges for new customers [1][2].

AT&T Chairman and CEO Randall Stephenson championed the deal, stating that it would fulfill President's Obama's vision to blanket the nation with high-speed wireless access:

This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations. We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers’ current demands, build for the future and help achieve the President’s goals for a high-speed, wirelessly connected America.

However, almost the majority AT&T and T-Mobile customers we interviewed expressed concern about the deal -- particularly T-Mobile customers who feared increases from T-Mobile's budget prices.

The deal would have left Sprint Nextel Corp. (S), who bitterly opposed the deal, in a distant third place, with 52 million customers.  Sprint thus far has refused to join the informal Verizon-AT&T coalition when it comes to contract terms -- it continues to offer unlimited internet. 

Reportedly the U.S. Justice Department sided with Sprint in the end, filing paperwork to block the merger, citing antitrust concerns. 

"AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market," said the filing [press release].

"The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services," said Deputy Attorney General James M. Cole. "Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition."

If the U.S. Government makes good on its intentions and officially blocks the sale of T-Mobile, AT&T has promised to pay Deutsche Telekom $3 billion USD in cash. In addition, Deutsche Telekom would receive an additional $2 billion USD worth of spectrum and secure a $1 billion USD roaming agreement reports Reuters.

Both AT&T and Sprint have responded to the actions by the DOJ. Up first is Wayne Watts, AT&T Senior Executive Vice President and General Counsel:

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.

Next up is Vonya B. McCann, senior vice president of Government Affairs for Sprint:

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....

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RE: Really???
By Jeffk464 on 8/31/2011 11:52:54 AM , Rating: 2
From what I heard it was also a lie that it would save at&t money on deploying equipment.

RE: Really???
By Jeffk464 on 8/31/2011 11:53:48 AM , Rating: 2
And lets not forget it would put the T-mobile girl out of a job. :)

RE: Really???
By Brandon Hill on 8/31/2011 11:56:09 AM , Rating: 3
I don't know who I liked better... Catherine Zeta Jones in her prime or this new chick.

RE: Really???
By MrBlastman on 8/31/2011 12:14:31 PM , Rating: 2
Catherine was hot. I hear she was bipolar too... That could be great one moment at bat%#@&crazy the next. Either way, Michael Douglas at least got some nice eye candy.

RE: Really???
By Reclaimer77 on 8/31/2011 1:36:55 PM , Rating: 3
That could be great one moment at bat%#@&crazy the next.

That's pretty much every hottie :P

RE: Really???
By MrBlastman on 8/31/2011 1:47:19 PM , Rating: 2
At least they look good while going nuts as some sort of consolation.

RE: Really???
By Reclaimer77 on 8/31/2011 5:40:04 PM , Rating: 2
Meah I got tired of dealing with that. That's why my current GF is an overweight single mother of three. She never goes nuts, she cooks like a pro, and realizes how lucky she is to have a guy like me. Zero drama!

RE: Really???
By Brandon Hill on 8/31/2011 5:49:54 PM , Rating: 2
Single mother of three? WTH, you hooked up with a Democrat? ;)

RE: Really???
By Reclaimer77 on 8/31/2011 6:05:34 PM , Rating: 3
No, she's not on Welfare :)

RE: Really???
By Makaveli on 8/31/2011 2:45:10 PM , Rating: 2
Catherine Zeta jones is better looking. Better face, Better body, euro hot. That T mobile chick looks like anyone chick I see walking down the street.

RE: Really???
By semiconshawn on 8/31/2011 3:22:34 PM , Rating: 3
You owe it to all men.. tell us where this magical street is.

RE: Really???
By rburnham on 8/31/2011 12:44:21 PM , Rating: 2
"Nowadays, security guys break the Mac every single day. Every single day, they come out with a total exploit, your machine can be taken over totally. I dare anybody to do that once a month on the Windows machine." -- Bill Gates

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