While IFA is heating up in Europe, huge news is happening stateside as the US Department of Justice has filed to block AT&T’s planned $39 billion acquisition of T-Mobile over anti-competitive concerns, according to reports appearing almost simultaneously on Bloomberg, The Wall Street Journal and Reuters.
“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market.” In an official statement on its website, the department clarified that the deal would result in "in higher prices, poorer quality services, fewer choices and fewer innovative products." It also explained that AT&T was pressured by T-Mobile offering a couple of industry firsts including the first Android phone, the Sidekick and national Wi-Fi hotspots. Feel free to check out the source link for the full press release of the Justice Department with all the juicy details and reasoning.The DOJ has grounded its filing by saying that
Sprint shares almost immediately jumped 8% on the news as the carrier and its CEO Dan Hesse headed opposition to the deal.
But it’s AT&T that has to face the biggest question now - how about that $3 billion in compensation fees it is required to pay T-Mobile if the deal isn’t approved? AT&T shares dropped 5% immediately. The carrier has to fight not only the DOJ, but also the Federal Communication Committee, which sided with the government on the matter, so its odds aren’t high.
The FCC has issued the following statement:
"By filing suit today, the Department of Justice has concluded that AT&T’s acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws. Competition is an essential component of the FCC’s statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices."