States sue to stop $26.5B Sprint-T-Mobile deal

Yolanda Curtis
June 12, 2019

Ten states led by NY and California filed a lawsuit on Tuesday to stop T-Mobile US Inc's $26 billion purchase of Sprint Corp, warning that consumer prices will jump due to reduced competition.

It's an unusual step by the state attorneys general ahead of a decision by federal antitrust authorities.

The state attorneys general said the merger would hurt competition and drive up prices for cellphone service.

The lawsuit, led by Letitia James of NY and Xavier Becerra of California, contends that competition will suffer and consumer prices will rise if the companies combine.

Other attorneys general joining Tuesday's lawsuit are from CT, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin.

The proposed merger, which has been in the works for years, would reduce the number of major US wireless telecom providers from four to three (including AT&T and Verizon). They filed the lawsuit against T-Mobile, Sprint and their controlling shareholder companies in federal court in the Southern District of NY on Tuesday.

The $26 billion merger deal would shrink the number of nationwide wireless carriers in the United States from four to three, prompting a number of antitrust investigations since the two companies first began exploring the deal in 2014.

T-Mobile declined comment. Sprint and the Justice Department did not immediately respond to requests for comment.

"Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for consumers", they wrote in their complaint.

Calling the proposed merger "anti-competitive, anti-worker and anti-consumer", Connecticut Senator Richard Blumenthal said the Justice Department "must follow the leadership of State AGs" who are fighting back for consumers.

The merger would cost customers of the two carriers some $4.5 billion per year, the lawsuit also claims. While the state attorneys general are unsure of how the Justice Department will decide on the deal, it's said that they've investigated the deal and don't feel the need to wait for the Justice Department to issue a decision.

If the states' lawsuit goes forward, the courts would have the last say, not the Justice Department, Blair Levin, an analyst with New Street Research, said in a note on Tuesday. The states "have a relatively straightforward case with significant antitrust precedent on their side".

T-Mobile and Sprint announced the deal more than a year ago, saying their combined pocketbooks and holdings of "spectrum", or the airwaves that carry cellphone signals, could result in a better 5G network than what either company could build on its own. Japanese tech conglomerate SoftBank owns Sprint, while Germany's Deutsche Telekom owns T-Mobile.

Last month, Federal Communications Commission Chairman Ajit Pai said he endorsed the union after the two companies agreed to a set of concessions. The DOJ has yet to rule, though the staff of the department has recommended that the agency sue to stop the deal. A decision is outstanding.

"Maintaining strong competition helps keep prices low", said Wisconsin Attorney General Josh Kaul. The Colorado Attorney General's Office released those numbers, citing Colorado Public Utilities Commission data.

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