10 state attorneys general file lawsuit to stop the deal.
The much-discussed potential T-Mobile-Sprint merger faced more resistance this week when a group of state attorneys general filed a lawsuit to block the deal, The New York Times reports. The 10 officials who filed the suit said the $26 billion deal would cause the prices customers paid for phone plans to increase because there’d be one less major wireless carrier.
T-Mobile and Sprint have insisted they have to get bigger in order to serve their customers better. The carriers stated the merger would reshape the telecommunications industry in the United States and create a strong rival to AT&T and Verizon as each entity would serve about a third of the market.
The carriers’ insistence did not stop the lawsuit, led by Letitia James of New York and Xavier Becerra of California, however. James said the goal was, “to stop the merger in its tracks,” according to The Times. Even if the lawsuit does not stop the merger, it could cause a lengthy delay. When T-Mobile and Sprint announced they had agreed to a deal last April, their target was to close by July 2019. Now the courts have seized control of the timetable.
The attorneys general argued in their complaint that the merger would cost Sprint and T-Mobile customers $4.5 billion a year. Additionally, James stated lower-income and minority communities would be impacted most and called the deal, “exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.” However, the carriers have said that united they could invest more deeply and faster in 5G cellular networks and bring high-speed Internet access to rural areas that cable services tend to neglect.
One thing T-Mobile and Sprint have going for them are allies within the Trump administration. Federal Communications Commission (FCC) Ajit Pai has said the merger would advance, “critical objectives” like “closing the digital divide in rural America and advancing the United States’ leadership in 5G.” The FCC’s five commissioners, which include three Republicans, are expected to vote on the proposed merger soon, according to The Times. Meanwhile, the Justice Department is also expected to make a decision in the coming weeks, but its approval is not guaranteed. Makan Delrahim, the head of the agency’s antitrust division, has encouraged the carriers to sell pieces of their businesses to maintain a competitive balance in the industry, according to sources familiar with his thinking.
Becerra stated that he and his fellow attorneys general plan to seek a preliminary injunction, so that even if the Justice Department approved the merger, the carriers would have to resolve the lawsuit first.
“If the judge decides to grant an injunction before the transaction is consummated, that would bring things to a halt,” Scott Hemphill, a professor who teaches antitrust law at New York University told The Times.