State Attorneys General Sue To Block T-Mobile, Sprint Merger

  • State Attorneys General Sue To Block T-Mobile, Sprint Merger

State Attorneys General Sue To Block T-Mobile, Sprint Merger

Several state attorneys general are set to file a lawsuit seeking to block T-Mobile's proposed takeover of Sprint on antitrust grounds.

"This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were created to prevent", New York's Attorney General Letitia James said in a statement, adding: "When it comes to corporate power, bigger isn't always better".

The state AGs say the merger would hurt competition and drive up prices for cellphone service.

The complaint, announced by the NY attorney general's office, was filed in the United States District Court for the Southern District of NY.

Consumer advocates, labor unions and many Democratic lawmakers worry that the deal could mean job cuts, higher wireless prices and a hit to the rural cellphone market.

"They see the FCC accepting certain remedies and concessions that don't, in their minds, solve the problem", she said.

The companies did not immediately respond to NPR's request for comment about the lawsuit.

Amanda Wait, an antitrust lawyer and former Federal Trade Commission lawyer, said states could be suing if they expect the Justice Department to come to a different conclusion than they have reached.

The lawsuit, led by the attorneys general of NY and California, represents a major legal and political headache that could upend the $26 billion telecom tie-up, which also has divided federal regulators in Washington who must bless the deal in order for it to proceed.

It's unusual, though not unprecedented, for states to band together to challenge mergers. And, as stated in the complaint, the USA previously won the "race to LTE" as a direct result of vigorous competition among wireless carriers.

The two companies previously tried to combine during the Obama administration but regulators rebuffed them. "Nor does it prevent T-Mobile from raising prices after the commitment ends".

T-Mobile, trying to reassure critics, promised the FCC it would build out a 5G network and invest in rural broadband on a specific timeframe or pay penalties. The companies offered to preserve some prices and rate plans and divest Sprint's prepaid phone business, called Boost Mobile, to a third party. As yet, the FCC has not formally approved the deal: the watchdog's chairman, Ajit Pai, only put out a statement indicating that he would put it forward for a vote and vote in favor.

But public-interest advocates said these conditions did not address the deal's main criticisms - higher prices in the long run and less wireless competition- and would be hard for regulators to enforce. Staff attorneys at DOJ have reportedly told the companies they won't approve the deal as proposed, but the ultimate decision lies with Makan Delrahim, the top antitrust official who is a political appointee.

Perhaps most famously, in 1998 attorneys general from 20 states and the District of Columbia filed a joint civil action against Microsoft claiming that the software maker had sought to exploit its dominance in desktop computers to stifle competition. The lawsuit further alleges that "Competition in retail mobile wireless telecommunications will be lessened substantially", that retail prices are likely to go up, and that the "quality and quantity of mobile wireless telecommunications services are likely to be less than they otherwise would [be]".

T-Mobile CEO John Legere at the company's headquarters. Sprint Corp. now has more than 54 million subscribers, and is a majority-owned subsidiary of SoftBank Group Corp.