Seven States Join AT&T-T-Mobile Merger Lawsuit

By Wendy Li | September 18 2011 2:44 PM

Seven states, including California, Pennsylvania, Ohio, Illinois and New York, have joined the lawsuit to stop AT&T’s acquisition of T-Mobile USA, the Justice Department said Friday. Previously, AT&T had proposed a $39 Billion deal to purchase T-Mobile.

Reuters

Late last year, AT&T slapped a deployed U.S. soldier with a "bill shock" of $16,000

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The acquisition plan has been criticized by the public interest groups ever since the two of the four large national wireless carriers announced the deal in March. Customers worry that without a competitor, the wireless phone plans of AT&T would be more expensive and the innovation of the wireless industry could be affected.

Echoing these concerns, the complaint of the Department of Justice said the merger would be a disaster for cell phone users and it called for the courts to consider possible long-term effects of the deal.

“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the DOJ said in its complaint.

“Customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger,” the complaint continued.

Some attorneys general of states joining the amended complaint showed opposition to the proposed merger.

This proposed merger would stifle competition in markets that are crucial to New York's consumers and businesses, while reducing access to low-cost options and the newest broadband-based technologies, New York Attorney General Eric T. Schneiderman said in a statement.

“The proposed merger would create highly concentrated markets in Massachusetts and could lead to higher prices and poorer service.” Massachusetts Attorney General Martha Coakley said.

Meanwhile, despite facing a potential difficulty in the acquisition of T-Mobile, AT&T said it will continue to make efforts to complete the merger and is confident the deal will be completed.

It is not unusual for state attorneys general to participate in DOJ merger review proceedings or court filings, AT&T representative Michael Balmoris said.

Balmoris also mentioned that the company had received support of the deal from 11 other states. They are Alabama, Arkansas, Georgia, Kentucky, Michigan, Mississippi, North Dakota, South Dakota, Utah, West Virginia and Wyoming.

The US Justice Department and AT&T Inc have filed an agreed-on proposal for settling the case. The only dispute is when the trial date will be. And on September 21, there will be a hearing to discuss settlement options.