AT&T Inc's $39 billion bid to buy Deutsche Telekom AG's T-Mobile USA came under scrutiny from New York's attorney general, who said he is looking into its possible anti-competitive impact.
Citing a potential near duopoly as a result of the proposed deal, Attorney General Eric Schneiderman said he wants to ensure the acquisition does not reduce access to low-cost cell phone options.
The deal announced last week would concentrate 80 percent of the U.S. wireless contract customers in two companies -- AT&T/T-Mobile and Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc .
Cell phones are no longer a luxury for a few among us, but a basic necessity, Schneiderman said in a statement. The last thing New Yorkers need during these difficult economic times is to see cell phone prices rise.
He said he will closely scrutinize AT&T's argument about the benefits of the purchase and weigh that against anti-competitive risks.
An AT&T spokesman said the company looks forward to sharing information with the AG's office and remains excited about the benefits of the deal, including improved customer service and expanded high-speed LTE wireless coverage to additional residents. LTE, or long-term evolution, is a new broadband technology.
T-Mobile could not immediately be reached for comment.
The acquisition, the world's largest M&A deal this year, is expected to draw intense scrutiny from U.S. antitrust officials.
Sprint Nextel has complained the deal would dramatically alter the wireless industry, harming consumers, and urged regulators to block it.
Charles McKee, Sprint's vice president of government affairs, said on Monday the company planned to reach out to others to help oppose the deal.
We will bring the regulatory fight wherever we need to, McKee said.
Consumers Union and public interest group Free Press have also criticized the transaction.
The U.S. Federal Communications Commission, which is trying to extend mobile broadband to more Americans, and Justice Department are expected to take at least a year to review the proposed merger and impose significant conditions if they approve it.
(Reporting by Dena Aubin; Additional reporting by Jasmin Melvin in Washington and Paul Thomasch in New York; Editing by Maureen Bavdek and Richard Chang)