States file federal lawsuit to block T-Mobile-Sprint merger

Ruben Fields
June 12, 2019

Attorneys general from the ten states have been investigating the deal, which would reduce the number of nationwide wireless carriers to three from four.

Along with James, nine other attorneys general attached themselves to the suit from states including California, Connecticut, Colorado, the District of Columbia, Maryland, Michigan, Mississippi, Virginia, and Wisconsin.

"When it comes to corporate power, bigger isn't always better". "That's why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were created to prevent".

James is leading the lawsuit along with California Attorney General Xavier Becerra.

The AGs filed their complaint in US District Court for the Southern District of NY.

The T-Mobile/Sprint deal has won the backing of a majority of the FCC.

The AGs' lawsuit alleges that the merger "likely would substantially lessen competition in interstate trade and commerce across the nation for mobile wireless telecommunications services, in violation of Section 7 of the Clayton Act", a USA antitrust law. "If consummated, the merger will eliminate the competition between Sprint and T-Mobile and will increase the ability of the three remaining [mobile network operators] to coordinate on pricing", the complaint states.

"Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for consumers", they wrote in their complaint.

The lawsuit asks for a judgment that the merger violates antitrust law and a permanent injunction that would prevent the companies from merging.

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James said the lawsuit was not filed to influence the Justice Department's decision on the merger, adding that negotiations were ongoing among the states, the Justice Department and the carriers.

The lawsuit is an unusual step by state officials ahead of a decision by federal antitrust authorities. The Republican chairman of the Federal Communications Commission supports the deal. Critics of the merger, including the 4Competition Coalition, have warned that the merger could lead to price increases for almost all wireless customers and increased wholesale rates.

If the states' lawsuit goes forward, the courts would have the last say, not the Justice Department, Blair Levin, an analyst with New Street Research, said in a note on Tuesday. T-Mobile and Sprint led the return of unlimited-data cellphone plans, for example.

T-Mobile and Sprint announced the deal more than a year ago, saying their combined pocketbooks and holdings of "spectrum", or the airwaves that carry cellphone signals, could result in a better 5G network than what either company could build on its own.

The proposed merger, which has been in the works for years, would reduce the number of major USA wireless telecom providers from four to three (including AT&T and Verizon).

The home Internet promise is not significant, as T-Mobile has already begun offering that service, the lawsuit said.

The states' complaint also said that divesting Boost would not resolve competitive concerns since Boost would be dependent on another carrier to provide network access, meaning that it is not independent.

USA state attorneys general from 10 states are planning to file a joint lawsuit in hopes of preventing the proposed merger between T-Mobile and Sprint.

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