By Joe Levi | August 31, 2011 11:29 AM
According to a Bloomberg report, earlier today the U.S. Department of Justice filed to block AT&T’s US$39 billion acquisition of T-Mobile USA Inc. Their reasons? The DOJ felt the deal would “substantially lessen competition” in the wireless market and would violate U.S. antitrust law.
“AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market,” the DOJ said in its filing.
This isn’t the end-all for the proposed deal, it’s just the initial filing. The courts still need to decide whether or not to allow the merger, but with the DOJ saying they shouldn’t, the future of the merger is in serious jeopardy.
If the court sides with the DOJ, AT&T will be hit with a bill for $3 billion in cash, payable to Deutsche Telekom, the owners of T-Mobile USA. AT&T would also provide T-Mobile with wireless spectrum in some regions and reduced charges for calls into AT&T’s network. The total cost to AT&T if the deal falls through is estimated to be as much as $7 billion.
AT&T shares fell 96 cents to $28.66.