News Analysis: The Justice Department filed an antitrust lawsuit in U.S. District Court that could effectively derail AT&T's T-Mobile deal, labeling it as bad for consumers and likely to raise prices.
filing of an antitrust
lawsuit against AT&T and Deutsche Telekom isn't shocking in the fact
that it happened so much as in its timing. Most observers didn't expect the
antitrust action to happen so soon. But the U.S. Department of Justice did file
a lawsuit Aug. 31, charging that the merger would be bad for consumers, would
raise prices, limit choice, and reduce competition and innovation as the Department
explained in a statement immediately after a press conference to announce the
a separate statement explaining the antitrust lawsuit, Deputy Attorney General
James Cole said, "In order to ensure that competition remains and that
everyone-including consumers, businesses and the government-continues to
receive high quality, competitively priced mobile wireless products and
services, the Department of Justice today filed an antitrust lawsuit in U.S.
District Court in Washington, D.C., to block AT&T's acquisition of
Assistant Attorney General Sharis Pozen expanded on Cole's comments adding, "It
is important to move expeditiously to preserve the lower prices and innovation
resulting from T-Mobile's competitive presence in this market. That's why we
filed a lawsuit to block this transaction; our goal is to preserve price
competition and innovation in this important industry."
there were plenty of other opinions. AT&T, in a statement that echoes back
to the Justice Department antitrust lawsuit that broke the company into pieces
in 1982, said, through its lawyer Wayne Watts, "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."
AT&T is upset that the DOJ wouldn't share its plans. Watts also added that
he expected the department to be swayed by its thoughts on the merger. "We plan
to ask for an expedited hearing so the enormous benefits of this merger can be
fully reviewed," Watts said in his prepared statement. "The DOJ has the burden
of proving alleged anti-competitive effects, and we intend to vigorously
contest this matter in court."
Telekom-marching in lockstep with AT&T, as has been the case on the public
relations front in the merger war-said through spokesman Philipp Schindera, "Deutsche Telekom is
very disappointed by the DOJ's action, and will join AT&T in defending the
contemplated merger against the complaint in court. DOJ failed to acknowledge
the robust competition in the U.S. wireless telecommunications industry and the
tremendous efficiencies associated with the proposed transaction, which would
lead to significant customer, shareholder and public benefits."
course, the DOJ statement makes clear that the Department did indeed consider
the efficiencies to which Schindera refers, and found them wanting.
meanwhile, expressed its delight in a corporate sort of way. Senior Vice
President Vonya McCann, calling the antitrust suit a decisive victory for
consumers and competition and the country, said, "By filing suit to block AT&T's proposed takeover of
T-Mobile, the DOJ has put consumers' interests first. Sprint applauds the DOJ
for conducting a careful and thorough review and for reaching a just decision-one
which will ensure that consumers continue to reap the benefits of a competitive
U.S. wireless industry. Contrary to AT&T's assertions, today's action will
preserve American jobs, strengthen the American economy and encourage
Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.
He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.