Sprint sues to stop AT&T, T-Mobile merger

Sprint Nextel Corp. filed suit in federal court Tuesday to block the merger of rivals AT&T and T-Mobile, calling the deal “brazenly anti-competitive.”

The lawsuit comes on the heels of the Justice Department’s surprise decision last week to try and block the deal in court. 

The lawsuits from Sprint and DOJ both allege the $39 billion acquisition by AT&T would illegally reduce competition in the wireless market.  

{mosads}”With today’s legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal,” said Susan Z. Haller, Sprint’s vice president of litigation.

Leigh Horner, a Sprint spokeswoman, said she expects a court to hear the two cases in one coordinated proceeding.

If the deal were completed, AT&T and Verizon would become the two dominant national wireless carriers, leaving Sprint a distant third.

If the merger falls through, Sprint is considered to be a potential buyer for T-Mobile. Although Sprint was reportedly in talks to buy T-Mobile before AT&T stepped in, some analysts argue Sprint can’t afford to purchase the company at this point.

The Justice Department filed a lawsuit against the deal last week, arguing it would stifle competition in the wireless market and hurt consumers. AT&T’s general counsel said he was “surprised and disappointed” by the government suit and vowed to fight it in court. 

The Federal Communications Commission is also reviewing the merger and has the power to essentially kill the deal by denying the sale of wireless licenses.   

In a statement, Sprint claimed the merger would “entrench the duopoly control of AT&T and Verizon,” giving the two companies control of 90 percent of profits in the wireless market.

“If the transaction were to be allowed, a combined AT&T and T-Mobile would have the ability to use its control over backhaul, roaming and spectrum, and its increased market position to exclude competitors, raise their costs, restrict their access to handsets, damage their businesses and ultimately to lessen competition,” Sprint wrote.

In its complaint, Sprint called T-Mobile a “low-price and innovative maverick competitor” that AT&T is seeking to eliminate.

“In one fell swoop, AT&T’s proposed purchase would eliminate one of four national competitors and marginalize a second (Sprint), pushing the market back toward a 1980s-style cellphone duopoly that would force consumers to endure higher prices and be denied the fruits of vigorous innovation,” Sprint wrote.

The company argued the courts must permanently block the merger and that no modifications or requirements would be enough to address their anti-trust concerns. 

“No other remedy would adequately protect the market and consumers from this avoidable harm,” the company wrote. 

Art Brodsky, a spokesman for Public Knowledge, an advocacy group that opposes the merger, said the suit puts added legal pressure on AT&T.

“If the Justice Department suit fails, this one will still be out there,” he said, adding that private antitrust suits are common. 

A spokeswoman for AT&T said the company would “vigorously contest” the lawsuit in court and argued the merger would expand broadband access and create thousands of jobs.

“This simply demonstrates what we’ve said all along – Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers,” she said.

—Last Updated at 4:12 p.m.