The U.S. Department of Justice has filed suit in a federal court to block AT&T's proposed takeover of T-Mobile USA.
The Justice Department said 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."
AT&T, which announced its plans earlier this year to acquire T-Mobile USA from Deutsche Telekom in a deal valued at $39 billion, said that the company was blindsided by the Justice Department's decision.
The only agency that is required to approve the merger is the Federal Communications Commission. Since the wireless companies have spectrum licenses granted by the FCC, that agency's approval is required to merge the companies. That said, the Justice Department has also been reviewing the merger. And even though its approval is not necessary, if it finds that the merger will violate antitrust laws it can sue to block the merger. That is what the agency is doing now.
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