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DOJ Challenges Merger Between AT&T and T-Mobile

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by Publius
Posted August 31, 2011, 3:32 PM

The Washington Post reports today that the Justice Department has decided to attempt to block the merger between AT&T and T-Mobile after it determined that AT&T's $39 billion bid for the rival company will reduce competition in the wireless industry and increase prices for customers.

AT&T has announced that it will fight DOJ's opposition to the merger, thus sparking what may become a massive battle in court between the company and the Obama Administration. According to AT&T, it will request the U.S. District Court in Washington, where the Justice Department earlier today filed a complaint to block the merger, to give the company an expedited hearing on the issue.

In the papers filed with the district court, DOJ argued that the merger would get rid of a "low cost alternative" in the market of wireless carriers. According to the Washington Post article, "T-Mobile competes directly with AT&T in 97 of 100 local wireless markets, and the two firms are the only national carriers using a technology known as GSM that can be used overseas."

FCC Chairman Julius Genachowsky tentatively expressed agreement with DOJ that the merger would harm competition, saying that "although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition."

But AT&T's general counsel Wayne Watts says that the merger will make the companies' wireless service better, expand AT&T's 4G network, and create investment and job opportunities. Responding to DOJ's complaint, Watts said, "The DOJ has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court."

The rejection of the AT&T-T-Mobile deal is the first time the Obama Administration has tried to block a significant merger in the technology market, with the President's former Assistant Attorney General for Antitrust approving Google's purchase of ITA, TicketMaster's merger with LiveNation, and Comcast's deal with NBC Universal.

Click here for the WSJ Law Blog's post on reactions to the DOJ move against the merger.

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