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[h1]DOJ files antitrust suit to block AT&T merger with T-Mobile[/h1]By David Goldman @CNNMoneyTech August 31, 2011: 11:21 AM ET
NEW YORK (CNNMoney) -- The U.S. Department of Justice filed an antitrust lawsuit against AT&T on Wednesday to block its $39 billion merger with T-Mobile.
Shares of AT&T (T, Fortune 500) tumbled nearly 4%.
The merger would have created the largest wireless company in the United States, combining AT&T's 95 million customers with T-Mobile's 34 million users for a total of 130 million subscribers.
The merged companies, along with Verizon Wireless, would also have dominated more than two thirds of the wireless market and account for 78% of the wireless industry's revenues.
"We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services," said James Cole, deputy Attorney General, in a press conference Wednesday.
AT&T has claimed that the merger is necessary in order to significantly expand its faster 4G wireless network to compete with Verizon (VZ, Fortune 500). Without the acquisition, AT&T says it would lack the necessary wireless spectrum and wherewithal to cover 97% of the U.S. population with 4G.
Sprint (S, Fortune 500) and many of the smaller carriers have argued that the merger will harm competition and raise prices for consumers, because it would eliminate T-Mobile, the last low-cost carrier with a national footprint.
The lawsuit does not necessarily mean the deal won't get done.
In April, the DOJ filed an antitrust lawsuit against Google (GOOG, Fortune 500), following its $700 million takeover bid for ITA, the world's largest airline search software company.
The DOJ and the search giant then quickly settled the claim, with the Justice Department approving the deal, provided that Google accept certain concessions and restrictions.
NEW YORK (CNNMoney) -- The U.S. Department of Justice filed an antitrust lawsuit against AT&T on Wednesday to block its $39 billion merger with T-Mobile.
Shares of AT&T (T, Fortune 500) tumbled nearly 4%.
The merger would have created the largest wireless company in the United States, combining AT&T's 95 million customers with T-Mobile's 34 million users for a total of 130 million subscribers.
The merged companies, along with Verizon Wireless, would also have dominated more than two thirds of the wireless market and account for 78% of the wireless industry's revenues.
"We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services," said James Cole, deputy Attorney General, in a press conference Wednesday.
AT&T has claimed that the merger is necessary in order to significantly expand its faster 4G wireless network to compete with Verizon (VZ, Fortune 500). Without the acquisition, AT&T says it would lack the necessary wireless spectrum and wherewithal to cover 97% of the U.S. population with 4G.
Sprint (S, Fortune 500) and many of the smaller carriers have argued that the merger will harm competition and raise prices for consumers, because it would eliminate T-Mobile, the last low-cost carrier with a national footprint.
The lawsuit does not necessarily mean the deal won't get done.
In April, the DOJ filed an antitrust lawsuit against Google (GOOG, Fortune 500), following its $700 million takeover bid for ITA, the world's largest airline search software company.
The DOJ and the search giant then quickly settled the claim, with the Justice Department approving the deal, provided that Google accept certain concessions and restrictions.
