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Sprint Moves to Stop AT&T’s Acquisition of T-Mobile

AT&T (T) is being blocked from purchasing T-Mobile from Deutsche Telekom AG reports the Wall Street Journal.

The US Justice Department Gets Involved

The US Justice Department filed a case against the acquisition on August 31, contending, “the combination of the second- and fourth-largest U.S. cellphone companies would hurt competition and likely raise prices.” This is a pretty routine way that the Justice Department ensures that competition amongst businesses within a sector remains strong so that consumers are not raked over by harmful oligarchical practices like raising prices across the board for no reason. By filing the case, the government has time to review all the ins and outs of a planned merger and can make a decision based on the best interests of the people.

Sprint Nextel Corporation (NYSE:S)

Sprint Objects

What is happening now regarding the acquisition of T-Mobile by AT&T is that Sprint is getting in on the action and filing a separate suit of its own to prevent the merger. Sprint is citing antitrust laws, buy those laws exist to protect competition, not competitors. Even the judge in the case felt compelled to ask Sprint, “Why isn’t it in your interest to let the Department of Justice do the work and not have your client pay for it?” Sprint is claiming that the merger would push the US cellular phone market into a duopoly between AT&T and Verizon Communications (VZ) in which “Sprint is marginalized and no longer able to constrain prices.” AT&T is pushing for the charges to be dismissed, saying, “Sprint knows…that a post-merger AT&T—freed of spectrum shortages that impair its ability to offer customers better services at lower prices—will be a more formidable competitor.”

U.S. District Judge Ellen Huvelle will hear arguments on Sprint’s right to sue today in Washington, D.C.

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