Sprint Sues to Prevent AT&T Acquisition of T-Mobile

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Posted September 6, 2011 at 6:43pm by iClarified

Sprint today sued AT&T and Deutsche Telecom seeking to block the proposed T-Mobile acquisition of T-Mobile citing a violation of Section 7 of the Clayton Act. The lawsuit was filed in federal court in the District of Columbia as a related case to the Department of Justice's (DOJ) suit against the proposed acquisition.

"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 company says 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.

Sprint Sues to Prevent AT&T Acquisition of T-Mobile

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Tom - September 6, 2011 at 8:56pm

Nonsense! There would be nothing illegal about said acquisition. It may ultimately be blocked by the government, but not because it is illegal.

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Stu - September 6, 2011 at 10:56pm

You are both rather uninformed and rather incorrect. An AT&T take over of tmo would indeed be a monopoly, AT&T would own 90%+ of ALL gsm towers. thus monopoly. VZW and AT&T would occupy 90+% of mobile market, thus duopoly. These types of things stifle competition and innovation. The stifling of competition will give those 2 companies the ability to collude in the area of price which means my costs will invariably rise greater than the rate of inflation and for worse service than I have now. Basically who is going to stop them? You? Not likely. The fed? Once the buyout happens, it will take 50 years for collusion charges to be brought and then what? Slap on the wrist. Break-up the AT&T network???? That sounds really familiar doesn't it? With any luck this bs will not be approved. I think DOJ is doing the right thing. With sprint and the other minor carriers to back them up, maybe ma bell's payoffs won't be good enough.

qw1987 - September 6, 2011 at 11:55pm

You are the one who is incorrect, Stu. Duopolies are not illegal. As I said, the government may ultimately block the acquisition (unlikely), but it would not be illegal. ATT and Verizon will provide adequate competition. The US would be far better off without shit companies like Sprint and T-mobile. Their infrastructure can be put to far better use.

Stu - September 7, 2011 at 3:04am

Tom, sorry but I never said duopoly was illegal. Just that both would cause other issues. Just picture only 2 car companies. The landscape would be ugly, inefficient vehicles. Look at the late 70's or early 80's. If it wasn't for the competition the big 3 would still be producing garbage vehicles. There would indeed be no pressure on the market to keep prices low or to offer new and exciting products. Oddly enough for the 2 shitty little companies, both sprint and tmo keep prices fairly low and offer innovative products. Realistically if not for the iPhone, AT&T would have had a really uninspiring collection of flip phones. AT&T is surprisingly very slow to respond to market needs. They have a long history of very bad customer service/relations and are pretty much perceived as the bully on the block. Just see what happened when VZW finally got the iPhone, a fair portion of AT&T customers jumped ship. Not that VZW is any better. The argument is not about a legal duopoly, but about competition and innovation, both of which would suffer greatly under a duopoly such as VZW and AT&T. There is a reason that such things are frowned upon. Tmo and sprint may be shitty little companies, don't get me wrong I use tmo only because I didn't want to go to AT&T, but they force AT&T and VZW to do things to improve service and the networks. It really only takes a little competition to sway the marketplace, it really doesn't require a behemoth.

qw1987 - September 7, 2011 at 4:11am

So how is it that you stated that I was incorrect with my first post? I simply stated that there would be nothing illegal about ATT's purchase of T-mobile. And there isn't. That is why it will likely occur. To block it,the DOJ will have to convince a judge that is is LIKELY that such an acquisition will be anti-competitive, not simply that it MIGHT be. That will be a tough burden for the government to meet. In fact, some would suggest that Verizon (legendary for horrible customer service, by the way) is the big bully and this would allow ATT to better compete with them. Thus, the acquisition may actually improve competition.