Justice Department Moves to Block AT&T’s Acquisition of T-Mobile

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Antitrust Division argues the merger would decrease competition, increase prices.

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In a bold assertion of power over the wireless telephone market, the Antitrust Division of the Department of Justice (DOJ) filed a lawsuit yesterday in federal district court to block AT&T Inc.’s proposed acquisition of T-Mobile USA Inc.

The proposed merger would consolidate the national wireless telephone market from four major players to three, leaving AT&T with over 132 million subscribers, followed by Verizon Wireless with 106 million subscribers, and Sprint Nextel with just over 52 million subscribers.   Sprint previously filed a formal Petition to Deny the merger with the Federal Communications Commission.

In the Division’s press release, Sharis A. Pozen, Acting Assistant Attorney General in charge of the Antitrust Division, explained that the Division took action because it believes the acquisition of T-Mobile by AT&T would decrease competition and result in higher prices for consumers throughout the country, in violation of federal antitrust law.

However, Pozen has also reportedly said the Division’s “door is open” to settling the lawsuit outside of court and potentially approving the merger with yet-to-be-determined concessions.

Attorney General Eric Holder appointed Pozen to her current position in early August, after Christine Varney, Assistant Attorney General of the Antitrust Division, resigned to return to private practice. The AT&T – T-Mobile lawsuit represents the first major action by the Division under Pozen’s leadership.