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Justice Department To Block AT&T Bid For T-Mobile USA

Justice Department today announced it is trying to block the AT&T bid for T-Mobile USA, a surprise move which AT&T did not expect.

Justice Department today announced it is trying to block the AT&T bid for T-Mobile USA, a surprise move which AT&T did not expect.

The United States Justice Department has filed to block the proposed $39 billion purchase by AT&T of T-Mobile USA from its owner Deutsche Telekom stating it has concerns about anti-competitiveness. With this announcement on Wednesday the shares of AT&T fell by over 3 per cent while Deutsche Telecom shares fell almost 7 percent, but the companies’ rival Sprint Nexel Corp had their shares rise by nearly 10 per cent.

It seems to have come as a big surprise to AT&T that this merger is being blocked, as there is a break-up fee to T-Mobile USA if the deal does not go ahead as planned by September 2012. It is believed that this fee is in the region of $3 billion.

The Deputy Attorney General James Cole announced the following at a news conference on Wednesday.
“Right now, four nationwide providers account for more than 90 percent of the mobile wireless connections in America, and preserving competition among them is crucial. For instance, AT&T and T-Mobile currently compete head-to-head in 97 of the nation’s largest 100 cellular marketing areas. They also compete nationwide to attract business and government customers.

“Were the merger to proceed, there would only be three providers with 90 percent of the market, and competition among the remaining competitors on all dimensions-including price, quality, and innovation-would be diminished.”

AT&T said in a statement that they are both surprised and disappointed by the action of the DOJ, (United States Justice Department. They plan to ask for a hearing as soon as possible so that they can review the benefits of this merger which they consider to be enormous.

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Anthony has more than 35 years business experience as an employee, manager, entrepreneur, and consultant. A Trivia buff, Anthony is one of the major contributors to the General News category, too.

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