They say to strike while the iron's hot, and that's exactly what Sprint is doing as it attempts to block AT&T from merging with T-Mobile. Less than a week ago, the U.S. Department of Justice filed a civil antitrust lawsuit seeking to block the proposed $39 billion deal, and rather than wait to see how that plays out, Sprint just filed a suit of its own, claiming the potential deal would run afoul of Section 7 of the Clayton Act.
"Sprint opposes AT&T’s proposed takeover of T-Mobile," said Susan Z. Haller, vice president-Litigation, Sprint. "With today’s legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal."
Sprint's concerns are threefold. First, Sprint says an AT&T/T-Mobile merger would harm consumers and corporate customers by causing higher prices and stifling innovation, essentially echoing what the DoJ said. Secondly, Sprint fears a duopoly in which AT&T and Verizon would control more than three-quarters of a trillion dollar wireless market, and 90 percent of the profits. And third, Sprint says if the deal was allowed to go through, a combined AT&T and T-Mobile company could use its control over backhaul, roaming and spectrum, and market position to leave competitors out in the cold, raise costs, restrict access to handsets, and generally do things that suck for consumers and the market as a whole.
In related news, if the deal does fall through, Deutsche Telekom (T-Mobile's parent company) has come out and refuted reports that it wouldn't be entitled to an agreed upon $6 billion breakup fee from AT&T if the deal isn't finalized.
"The story from Reuters misstated the facts," Deutsche Telekom representative Andreas Fuchs told CNET in reference to this Reuters report. "The breakup fee was agreed to precisely to deal with the possibility that regulatory approval is not obtained.