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Justice Dept. to Block AT&T's T-Mobile Deal

Don Reisinger

The U.S. Department of Justice has filed suit in a federal court in Washington, D.C., to block AT&T's proposed takeover of T-Mobile USA.

The Justice Department said today in its filing with the U.S. District Court for the District of Columbia that the deal would "substantially lessen competition" in the wireless industry, and thus, should be blocked from approval. The lawsuit went on to say that the deal could potentially cause "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."

"The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services," Deputy Attorney General James M. Cole said in a statement announcing the decision. "Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition."

AT&T came out quickly against the Justice Department's decision. In an e-mailed statement to CNET, the company's senior executive vice president and general counsel, Wayne Watts, said that the company was blindsided by the Justice Department's decision.

"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," Watts said. "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 mobile broadband to another 55 million Americans, or 97 percent of the population; [and] result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most."

Bloomberg was first to report on the news.

Earlier this year, AT&T announced its plans to acquire T-Mobile USA from Deutsche Telekom in a deal valued at $39 billion. As soon as the deal was announced, critics chimed in, saying that it could stifle competition in the marketplace and ultimately hurt both consumers and competitors. Sprint, which could be dwarfed by the combined AT&T and T-Mobile, was especially outspoken about the deal, saying that it would fight it to the end.

"Sprint urges the United States government to block this anticompetitive acquisition," the company said in a statement following the announcement of the deal. "This transaction will harm consumers and harm competition at a time when this country can least afford it. So on behalf of our customers, our industry, and our country, Sprint will fight this attempt by AT&T to undo the progress of the past 25 years and create a new Ma Bell duopoly."

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