California joins suit to block AT&T purchase of T-Mobile
AT&T Inc.’s $39-billion fight to take over cellular provider T-Mobile USA Inc. has taken another hit.
Just two weeks after the U.S. Justice Department sued to block the deal in federal court, California Atty. Gen. Kamala D. Harris and six other state attorneys general have joined the antitrust suit, saying the combination would create a cellular behemoth that would result in less competition in the wireless market and higher prices for consumers. Also, they said, it could kill jobs.
Harris said Friday that her review of the case “has led me to conclude that it would hinder competition and reduce consumer choice.” The attorney general said she hoped to “resolve this matter in a way that will create jobs in our state, encourage a vibrant technology sector and protect competition in the marketplace.”
Harris was joined by top state prosecutors in New York, Washington, Illinois, Massachusetts, Ohio and Pennsylvania. Collectively they represent more than one-third of the U.S. population.
Consumer advocates applauded the move. It “reinforces the seriousness of the consequences that a combined AT&T-T-Mobile would have on consumers,” said Paul P. Desai, policy counsel for Consumers Union.
On Aug. 31 the Justice Department sued to challenge the deal, saying consumers would pay more for worse service. Obama administration officials also said they were worried that the combination of the two companies would hurt the national employment picture. The initial lawsuit came the same week that President Obama unveiled his $447-billion jobs initiative.
A leading technology state and frequent bellwether in technology policy matters, California has been aggressively scrutinizing the acquisition for weeks. Its decision to intervene is “huge,” said Samuel Kang, general counsel for the Greenlining Institute, a Berkeley consumer group that advocates to provide better financial and utility services for low-income communities.
“We’re talking about the state’s top consumer advocate [Harris] questioning the merger,” Kang said. “There are huge questions that have implications for the largest [cellphone] market in the United States.”
The Justice Department lawsuit was followed a week later by a similar action by Sprint-Nextel Corp., which also sued to block the deal. Sprint, the third-largest wireless carrier, behind Verizon Wireless and AT&T, stands to be marginalized if it is forced to compete with two far larger carriers, including a merged AT&T and T-Mobile. Sprint quickly voiced its support of the states’ action on Friday.
A group of 15 Democratic members of Congress wrote to President Obama this week to urge him to back off his opposition to the deal, saying AT&T’s promise to extend its wireless network to rural areas would create tens of thousands of jobs. Critics have called that claim into question, and noted that most mergers result in quick layoffs as duplicate positions in departments like accounting and marketing are eliminated.
AT&T’s union, the Communications Workers of America, supports the acquisition, and has said nonunionized T-Mobile workers would benefit from the chance to join a union.
AT&T said it was not surprised by the addition of new plaintiffs in the federal government’s lawsuit. Spokesman Lane Kasselman noted that 11 other state attorneys general are supporting the proposed acquisition.
“We remain confident that we’ll reach a successful conclusion and look forward to delivering the merger benefits of additional wireless network capacity to improve customer service,” he said.
