ARCHIVES: This is legacy content from before Marketing Dive acquired Mobile Marketer in early 2017. Some information, such as publication dates, may not have migrated over. Check out the new Marketing Dive site for the latest marketing news.

Sprint: Proposed AT&T/T-Mobile deal is illegal

Wireless carrier Sprint Nextel has filed a suit to block the proposed acquisition of T-Mobile by AT&T, claiming such a transaction would harm retail consumers and other carriers.

Sprint claims that the acquisition is a direct violation of Section 7 of the Clayton Act. Section 7 concentrates on forbidding acquisitions that could lessen competition or create a monopoly. 

?Sprint opposes AT&T?s proposed takeover of T-Mobile,? said Susan Z. Haller, vice president of litigation at Sprint, Overland Park, KS, in a statement. ?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.?

Sprint declined to comment for this story.

Big deal
The proposed $39 billion acquisition was announced March 20 at the CTIA Wireless conference in Orlando, FL.

The combination of the nation?s second-largest carrier with the third largest, Deutsche Telekom?s T-Mobile USA, will create a mobile behemoth of 130 million subscribers with $79.8 billion combined wireless revenue. It will also mean that between AT&T and Verizon Wireless, these two carriers will account for three out of four mobile subscribers nationwide.

The Department of Justice filed a lawsuit on Aug. 31 amid concerns that the removal of T-Mobile from the wireless carrier market could hurt competition, innovation, consumers and raise prices. AT&T will fight the suit in court and could end up having to divest spectrum in order to get the deal approved.

Sprint?s position
Sprint?s lawsuit focuses on the competitive and consumer harms which would result from a takeover of T-Mobile by AT&T.

The carrier claims that the proposed acquisition will harm retail consumers and corporate customers by causing higher prices and less innovation.

Additionally, Sprint fears that if the deal were to go through, AT&T and Verizon would control more than three-quarters of wireless market and 90 percent of the profits. This would obviously harm Sprint and the other independent wireless carriers.

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, according to Sprint.

?DOJ?s lawsuit in large measure seems designed to bring AT&T to the table to deal," said Michael B. Hazzard, partner at Arent Fox LLC, Washington. "AT&T has expressed a willingness to make concessions. 

"Sprint is joining in, at least in part, to make sure Sprint has a say in the types of divestitures or conditions that get imposed on any AT&T/T-Mobile transaction," he said.

"The DOJ lawsuit is a very important development, but a negotiated settlement resulting in a transaction after divestitures seems more likely than a trial on the merits.?

Mr. Hazzard is not associated with Sprint or its lawsuit. He commented on the suit based on his expertise pertaining to the issue at hand.