Sprint T-Mobile merger gets hit with lawsuit from 10 states

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New York State Attorney General Letitia James speaks at a news conference to announce the filing of a federal lawsuit in partnership with at least 10 U.S. state attorneys general to stop a proposed $26 billion merger of mobile carriers Sprint and T-Mobile in New York, U.S., June 11, 2019.

And now, according to Bloomberg, state attorneys general from nine states and the District of Columbia (all Democrats) filed a lawsuit in NY today seeking to block the transaction.

James said the lawsuit was not filed to influence the Justice Department's decision on the merger, adding that negotiations were ongoing among the states, the Justice Department and the carriers. Sprint Chief Executive Officer Marcelo Claure and John Legere, his counterpart at T-Mobile, met with US Justice Department officials on Monday, according to a source familiar with the matter. "That's why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were created to prevent".

Perhaps most famously, in 1998 attorneys general from 20 states and the District of Columbia filed a joint civil action against Microsoft claiming that the software maker had sought to exploit its dominance in desktop computers to stifle competition.

The AGs filed their complaint in US District Court for the Southern District of NY.

The T-Mobile/Sprint deal would leave the USA with three major nationwide carriers instead of the current four.

The state attorneys general said the merger would hurt competition and drive up prices for cellphone service. "If consummated, the merger will eliminate the competition between Sprint and T-Mobile and will increase the ability of the three remaining [mobile network operators] to coordinate on pricing", the complaint states. They say that combining Sprint and T-Mobile will make the industry as a whole - Verizon and AT&T, too - less likely to offer plans and services that consumers like.

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Since being announced past year, T-Mobile's push to merge with Sprint has been met with strong government pushback over concerns it would harm competition.

The next two big steps will be determining the position of Makan Delrahim, head of the Justice Department's antitrust division, and the identity of the judge assigned to the states' lawsuit, Levin wrote.

Federal Communications Commission Chairman Ajit Pai has proposed allowing the merger. And they say that the companies don't need to combine in order for 5G service to roll out in the US, noting that Sprint has already launched a 5G network in parts of several cities and T-Mobile has separately been working to deploy 5G.

It's worth noting that not all experts agree that the merger would eventually lead to higher prices. "The cumulative effect of this merger, therefore, will be to decrease competition in the retail mobile wireless telecommunications services market and increase prices that consumers pay for mobile wireless telecommunications services". "Nor does it prevent T-Mobile from raising prices after the commitment ends".

Shares of both companies fell on the news, with Sprint losing 7% and T-Mobile dropping almost 2% Tuesday morning, before regaining some of their losses.

The home Internet promise is not significant, as T-Mobile has already begun offering that service, the lawsuit said.

USA state attorneys general from 10 states are planning to file a joint lawsuit in hopes of preventing the proposed merger between T-Mobile and Sprint.

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