Ten US states sue to stop $26 billion Sprint and T-Mobile merger deal

WASHINGTON: Ten states led by New York and California filed a lawsuit on Tuesday to stop T-Mobile US Inc’s $26 billion purchase of Sprint Corp, warning that consumer prices will jump due to reduced competition.
The complaint comes as the US Justice Department is close to making a final decision on the merger, which would reduce the number of nationwide wireless carriers to three from four.
The all-Democratic attorneys general from the 10 states, including Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin, say the reduced competition would cost Sprint and T-Mobile subscribers more than $4.5 billion annually, according to the complaint.
“When it comes to corporate power, bigger is not always better,” New York Attorney General Letitia James said at a news conference.
“To many upstate New Yorkers, (the carriers) still struggle with 3G,” she said, adding that there is nothing in the merger that will guarantee more towers and coverage for certain communities.
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.
James also said her office did not notify Justice before the states filed the lawsuit, adding it was not required for them to do so. State attorneys general often participate in lawsuits aimed at stopping mergers but rarely go it alone.
The complaint was filed in the US District Court for the Southern District of New York. “This is the third time T-Mobile has tried to merge and shrink the market to three players,” said California Attorney General Xavier Becerra.
“Every time they’ve tried they’ve been blocked or forced to walk away because of opposition from the government… Opposition that’s based on the same concerns laid out in our lawsuit today.” Shares of Sprint dropped 6.2 per cent to $6.56 while T-Mobile was down 1.4 per cent at $75.28.
The T-Mobile/Sprint deal has won the backing of a majority of the FCC. The US Justice Department’s antitrust division staff has recommended the agency block the deal, but no final decision has been made.
Calling the proposed merger “anti-competitive, anti-worker and anti-consumer,” Connecticut Senator Richard Blumenthal said the Justice Department “must follow the leadership of State AGs” who are fighting back for consumers.
“Saying no to this deal should be easy,” Blumenthal said in a tweet.
While AT&T and Verizon dominate the overall US wireless market, T-Mobile is the most popular among customers who make less than $75,000 per year, and Sprint’s Boost Mobile prepaid brand counts 83 per cent of its users in that income range. — Reuters