The proposed merger between AT&T and T-Mobile has hit a major roadblock. CNN reports that the US government"s Justice Department has filed a lawsuit today against the merger, claiming that it would violate current anti-trust laws. The government claims in the lawsuit, filed in a Washington DC federal court, that, "AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market." In a press conference, deputy Attorney General James Cole said, "We feel the combination of AT&T and T-Mobile would result in tens of millions of consumers across the U.S. facing higher prices, fewer choices, and lower quality products for wireless services."
AT&T, the nation"s largest wireless phone carrier, first announced its proposed merger deal with T-Mobile, the nation"s fourth largest wireless carrier, a number of months ago for a whopping $39 billion price tag. At the time AT&T said that the deal was needed in part to expand the company"s 4G network across the US. However a recently leaked document showed that AT&T could expand their 4G network on their own for much less than what the T-Mobile merger will cost them. That caused some people to speculate that AT&T"s real motives were to eliminate competition.
In a statement sent to AllThingsD.com, AT&T"s general counsel Wayne Watts said that the company was "surprised and disappointed" by the Justice Department"s lawsuit, adding, "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." Shares of AT&T went down 5 percent in trading today after the news of the lawsuit was announced. Sprint, the nation"s third largest wireless carrier, saw its share price spike over 5 percent on the news.