DOJ files antitrust suit to block AT&T, T-Mobile merger

[JURIST] The US Department of Justice (DOJ) [official website] on Wednesday filed a civil antitrust lawsuit to block the proposed $39 billion acquisition of cellular carrier T-Mobile USA by telecom giant AT&T [corporate websites]. The agency filed suit [press release] in the US District Court for the District of Columbia [official website] and seeks to prevent AT&T from acquiring T-Mobile from parent company Deutsche Telekom AG [corporate website]. Citing traditional antitrust concerns, DOJ claims [complaint, PDF] that the merger of two of the top four domestic mobile carriers would result in higher prices, fewer choices and poorer quality of services for consumers:

Due to the advantages arising from their scale and scope of coverage, each of the Big Four nationwide carriers is especially well-positioned to drive competition, at both a national and local level, in this industry. T-Mobile in particular—a company with a self-described "challenger brand," that historically has been a value provider, and that even within the past few months had been developing and deploying "disruptive pricing" plans—places important competitive pressure on its three larger rivals, particularly in terms of pricing, a critically important aspect of competition. AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market.
The other "Big Four" carriers are Verizon Wireless, the nation's largest, and Sprint Nextel [corporate websites]. The largest recent example of the smaller firms' impact on the industry came in 2010 when AT&T and Verizon significantly slashed the prices of their unlimited calling plans [CNNMoney report], primarily as a result of aggressive pricing set by T-Mobile and Sprint.

The worldwide consolidation of media is an ongoing global concern. Earlier this month a class action lawsuit was filed [JURIST report] against Apple [corporate website] and five major publishers for allegedly colluding to illegally fix electronic book (e-book) prices. In a Hotline article published last month [JURIST comment] Dave Saldana, Communication Director for Free Press, used the proposed AT&T/T-Mobile deal as an example of the enormous influence giant media corporations can bring to bear through massive public relations blitzes and the acquisition of political influence through the pouring of money into lobbying efforts and campaign contributions. As a result of exactly these kinds of efforts, AT&T had remained confident to this point that its T-Mobile purchase would go through, "because it knows it has several hundred million reasons to push for the merger, and millions of means to get it." In that sense antitrust concern regarding media consolidation is doubly founded, because unlike manufacturing or other traditional industry mergers, the resultant titans of media created through already-giant media company mergers not only dominate their own marketplace, but the information market as well, giving them leverage to sway public opinion and dominate the narrative when their own practices are questioned.

 

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