A group of attorneys general from 10 states filed a federal lawsuit Tuesday in a bid to block a proposed merger between wireless carriers T-Mobile and Sprint, a $26 billion deal that has yet to receive the Justice Department's approval. The New York state attorney general has a press conference scheduled for later today.
"We can not sit idly by while two of the biggest companies in the country attempt to join forces, eliminating competition between Sprint and T-Mobile and likely raising prices by almost 10 percent", said Michigan Attorney General Dana Nessel in a release. The suit was filed in NY federal court in coordination with Colorado, the District of Columbia, Maryland, Michigan, Mississippi, Nevada, Virginia, and Wisconsin, the NY attorney general's office announced. State attorneys general often participate in lawsuits aimed at stopping mergers but rarely go it alone. And if the deal closes, T-Mobile and Sprint have promised the FCC that it will sell off Sprint's Boost Mobile pre-paid unit.
"The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country", New York Attorney General Letitia James said in a statement. "The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in NY and in urban areas across the country".
The concessions also included penalties if they failed to follow through.
The complaint was filed in the U.S. District Court for the Southern District of NY. If they merge, the complaint states, it would be a disincentive to innovate.
Federal Communications Commission Chairman Ajit Pai has said he supports the deal. The FCC has gotten on board with the merger, but the Justice Department's Antitrust division is reportedly unhappy with the deal as it now stands. "Nor does it prevent T-Mobile from raising prices after the commitment ends".
While Pai has blessed the merger, it has not yet formally been approved by the FCC. They have also indicated they were considering divesting wireless spectrum.
The Justice Department evaluates deals using stricter criteria than the FCC's "public interest" standard - namely whether they harm competition and raise prices for consumers. It's unclear how Justice Department antitrust chief Makan Delrahim will decide, but the antitrust division staff has reportedly recommended that the merger be blocked.
T-Mobile and Sprint have previously argued that combining would allow them to innovate in ways that would benefit consumers.
Before filing suit, the states gave significant consideration to T-Mobile and Sprint's claims of increased coverage in rural areas.
In fact the lawsuit quotes the majority shareholder of T-Mobile US, Germany's Deutsche Telekom, as saying in a document that reducing the number of large mobile operators in the United States would result in a "more '********; market by reducing competition and enabling it to earn a greater return on its investment".
T-Mobile and Sprint have a deadline of July 29 to complete their merger.
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