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US operator Sprint Nextel has brought a lawsuit against AT&T, seeking to block its rival's proposed $39bn acquisition of T-Mobile’s US operation. The suit follows a civil antritrust lawsuit from the US Department of Justice, which claimed the deal was anticompetitive.
September 7, 2011
US operator Sprint Nextel has brought a lawsuit against AT&T, seeking to block its rival’s proposed $39bn acquisition of T-Mobile’s US operation. The suit follows a civil antritrust lawsuit from the US Department of Justice, which claimed the deal was anticompetitive.
Sprint claims the deal would be a violation of Section 7 of the US Clayton Act, which covers competition issues in the US. The lawsuit was filed in federal court in the District of Columbia as a related case to the DoJ suit against the AT&T.
“With [this] 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,” said Susan Z. Haller, vice president for litigation at Sprint.
Among the firm’s complaints was Sprint’s assertion that the proposed acquisition would harm customers by raising prices and curtailing innovation, and damage Sprint and other wireless carriers. The firm alleges that if the deal were to get the go-ahead, 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.”
The DOJ suit against the proposed acquisition cites that the deal would “substantially lessen competition” in the US wireless sector.
AT&T responded to the DoJ’s suit, saying it was “surprised and disappointed” by the legal action, as it had with the Department of Justice several times, and received no indication from the DoJ that such action was being contemplated.
“The DoJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court,” said Wayne Watts, AT&T senior executive VP and general counsel.
Watts claimed that the merger would allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans; 97 per cent of the population, and result in billions of additional investment and tens of thousands of jobs.
“We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court,” added Watts.
It has been suggested that, if the deal is blocked, AT&T could have to pay $3bn to T-Mobile’s parent company Deutsche Telekom, and hand over additional spectrum and wireless data roaming arrangements, as part of a “reverse break fee”.
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