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Justice Department sues to block AT&T merger with T-Mobile

August 31, 2011|From Reuters
  • The Department of Justice is suing to block AT&T's deal with T-Mobile.
The Department of Justice is suing to block AT&T's deal with T-Mobile. (Associated Press )

WASHINGTON — The Obama administration Wednesday filed to block AT&T's proposed $39 billion acquisition of wireless rival T-Mobile USA because of anti-competitive concerns.

The Justice Department said the acquisition would "remove a significant competitive force" with AT&T and T-Mobile competing in at least 97 of the top 100 U.S. wireless markets, according to court papers obtained by Reuters.

Blocking the acquisition on antitrust grounds would deal a blow to the telecommunication giant's expansion plans.

The deal falling through would cost AT&T, which promised to pay a cash breakup fee of $3 billion on top of giving spectrum to T-Mobile USA, a unit of Deutsche Telekom AG .

AT&T has said the deal would let it add capacity and meet demand for high-speed wireless service. Rivals such as Sprint Nextel Corp say it would hurt competition and lead to higher prices, an argument echoed by the Justice Department in the court papers.

The Federal Communications Commission has not made a decision to block the deal, a spokesman said. AT&T declined to comment.

Shares in AT&T slid 3.8 percent to $28.50. Stock in rival Sprint rose 9 percent to $3.85.

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