The Justice Department filed suit on Wednesday last week, to block AT&T's $39 billion deal to buy T-Mobile USA.
The government contends that the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition.
The Justice Department is arguing that the takeover would violate antitrust laws and “would substantially lessen competition for mobile wireless telecommunications services across the United States, resulting in higher prices, poorer quality services, fewer choices and fewer innovative products for the millions of American consumers who rely on mobile wireless services in their everyday lives. ”
However T-Mobile and AT&T believe that a total of 5,000 jobs would be hand delivered to the US if the two telcos were allowed to become one, but it'll take a heck of a lot more convincing now.
Democratic Sen. Herb Kohl of Wisconsin, who heads the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights, said the suit was an effort to protect consumers "in a powerful and growing industry that reaches virtually every American."
Four nationwide providers -- Verizon, AT&T, T-Mobile and Sprint -- account for more than 90 percent of mobile wireless connections.
If things end up falling apart, it's important to remember that AT&T would be forced to pay Deutsche Telekom $3 billion as a break-up fee.
Update: Wayne Watts, AT&T Senior Executive Vice President and General Counsel, issued the following statement (seen after the break)...
"We are surprised and disappointed by today's action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated. We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court. At the end of the day, we believe facts will guide any final decision and the facts are clear. This merger will:
- Help solve our nation's spectrum exhaust situation and improve wireless service for millions.
- Allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population.
- Result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.
We remain confident that this merger is in the best interest of consumers and our country, and the facts will prevail in court."