Sprint isn’t letting the Department of Justice have the stage to itself when it comes to filing suits against the proposed $39 billion AT&T-T-Mobile merger.
Sprint on Tuesday announced that it has brought suit against AT&T and Deutsche Telekom to block the two companies from merging “as a violation of Section 7 of the Clayton Act.” Section 7 of the Clayton Antitrust Act bars any person from acquiring “the whole or any part of the stock or other share capital” that would “substantially … lessen competition, or to tend to create a monopoly.” In its suit, Sprint argues that the proposed merger would violate this act because it would lead to AT&T and Verizon controlling 75 percent of the wireless market while taking in 90 percent of the profits.
Sprint’s antitrust suit comes less than a week after the U.S. Department of Justice filed an antitrust suit against the merger with the U.S. District Court for the District of Columbia. In its suit, the DOJ similarly argued that the proposed merger would significantly damage competition in the wireless industry, especially since T-Mobile has historically offered low-cost wireless voice and data services for customers. The DOJ also contended that any efficiencies gained by combining AT&T and T-Mobile spectrum would not be enough to offset the damage done to U.S. consumers by further consolidation of the wireless industry.
For its part, AT&T seemed unbowed by the DOJ’s suit as AT&T general counsel Wayne Watts released a statement saying the company was “surprised and disappointed by today’s action,” while also vowing “to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed.”
AT&T’s proposed merger with T-Mobile has come under criticism from consumer groups, rival wireless carriers such as Sprint, and analyst firms such as the Yankee Group, who contend that the merger will lead to the emergence of a duopolistic wireless telecom market controlled largely by Verizon and AT&T. Were the merger to pass regulatory muster, it would be the fourth major wireless carrier merger in eight years, following AT&T-Cingular in 2004, Sprint-Nextel in 2005 and Verizon-Alltel in 2008. AT&T would become by far the largest wireless carrier in the United States with more than 130 million subscribers.