Nine states and the District of Columbia have filed suit to block the T-Mobile-Sprint merger, according to their respective attorneys general.
The FCC majority has signaled they will approve the deal, while the Justice Department has not weighed in. There have been reports, though, that DOJ staff recommended against the deal, which would combine the number three and four wireless carriers but would also create a stronger number three to the former Bells Verizon and AT&T.
Antitrust chief Makan Delrahim has also reportedly been talking with FCC chair Ajit Pai, who said the deal will help the U.S. in the race to 5G and the effort to close the rural digital divide. He also likes that the companies have agreed to divest low-cost subsidiary Boost Mobile if the merger is completed.
The complaint was filed in the United States District Court for the Southern District of New York in conjunction with California, Colorado, Connecticut, Maryland, Michigan, Mississippi, New York, Virginia, Wisconsin and Washington, D.C.
It alleges that the merger "would deprive consumers of the benefits of competition and drive up prices for cellphone services," according to the Wisconsin AG's office.
“Maintaining strong competition helps keep prices low,” said Wisconsin Attorney General Josh Kaul in a statement. “If this proposed merger happens, many Wisconsinites will see increased prices for their cell-phone plans."
The attorneys general said they had investigated the companies' claims of fast speeds and increased capacity, but found those were unverifiable, in part because they could only be delivered "years in the future."
They also concluded the deal would hurt independent dealers who could lose their jobs. T-Mobile CEO John Legere has said the merger would result in net job gains, not losses.
Attorney Andrew Schwartzman, fresh from the oral argument Tuesday (June 11) in Prometheus' challenge to FCC ownership deregulation, saw the suit as putting Delrahim in an unprecedented dilemma if he joins Pai in backing the deal. He said the FCC is pushing him one way—sort of uncharted territory for their dual antitrust/public interest reviews—and the states are pulling him another.
“The lawsuit filed by the Attorneys General of ten states to block the T-Mobile/Sprint is disappointing and misguided. It is noteworthy that all ten Attorneys General are Democrats, and that their counterparts in the other 40 states chose not to sign onto this unusual, if not unprecedented, maneuver," said Free State Foundation President Randolph May. "Antitrust law should not be a matter of partisan politics or predilections, but rather a matter of adherence to widely accepted jurisprudential principles that know no party. The fact that all of the AGs bringing the lawsuit are Democrats is troubling but perhaps revealing."
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