Tuesday, August 30, 2011

Department of Justice Blocks AT&T + T-Mobile Merger

The U.S. Department of Justice filed an antitrust lawsuit in U.S. District Court in Washington, D.C. to block AT&T's acquisition of T-Mobile. The DOJ said it will block the deal because the merger would result in "tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services."


The acquisition, which was valued at US$39 in cash and stock when it was announced on March 20, 2011, reportedly carries a break-up fee of $6 billion in cash, spectrum and services that AT&T must pay to Deutsche Telekom if it is not completed.


In announcing its decision, the DOJ noted that AT&T's acquisition of T-Mobile would eliminate a company that has been a disruptive force through low pricing and innovation by competing aggressively as the "the No. 1 value challenger." The DOJ also expressed concern that further market concentration would make it even more difficult for regional providers who already face significant competitive limitations stemming from their lack of national networks.


AT&T is the second largest mobile operator in the U.S. with approximately 98.6 million connections to wireless devices. T-Mobile USA is the fourth-largest mobile operator in the U.S. with approximately 33.6 million wireless connections to wireless devices.


In conclusion, the DOJ said it was not convinced by AT&T's arguments that the proposed transaction would yield efficiencies benefiting consumers and outweighing adverse impacts on competition. The key finding was that AT&T could achieve the same network power and reach by deploying its own infrastructure rather than by eliminating a competitor.


"T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network," said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."


The 22-page complaint is online.
http://www.justice.gov/opa/pr/2011/August/11-at-1118.htmlhttp://www.justice.gov/opa/documents/Justice-ATT-TMobile-Complaint.pdf

0 comments:

Post a Comment

See also