DOJ Gives AT&T/T-Mobile Merger Thumbs Down

— August 31, 2011

According to news reports, the U.S. government is taking action to block AT&T’s controversial $39-billion proposed merger with T-Mobile USA, which would create the country’s largest mobile carrier but increase prices, reduce competition, and decrease the quality of services for consumers.
 
The New York Times reported that the U.S. Department of Justice filed a complaint on Aug. 31 with Washington’s U.S. District Court, citing T-Mobile significance in shaping competition in the wireless industry.
 
“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 in a statement. “Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”  
 
Dan Shey, practice director, enterprise for ABI Research, was surprised by the move. “The challenge for the merger going through was the impact on the small business market,” he said. “I thought on the consumer side you could probably find justification for the merger going through. AT&T would then have to address concerns on the business side, but they’re a savvy group—they’d probably figure out how to do that.
 
“There must have been enough influence to say ‘This is not a good thing,’” he added.

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