AT&T claims that the removal of T-Mobile from the competitive landscape would do no harm to consumers. When the Department of Justice filed their lawsuit it was on the merit that the merger would change the competitive landscape and impact consumers in a negative way. The Department of Justice and Sprint contend that eliminating T-Mobile would spark increased pressure to raise rates. Once merged both AT&T and Verizon would dictate the pricing structure for the other carriers.
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Even more shocking is that AT&T says MetroPCS and Cricket are bigger threats than T-Mobile. AT&T’s filing says that MetroPCS, Cricket, US Cellular and Cellular South are “innovative upstarts” that present more of a threat than T-Mobile.
AT&T was counting on swift Department of Justice approval. When the lawsuit was first announced AT&T felt blindsided by the DOJ as they had complied with any and all requests before the lawsuit was filed. Typically in deals like this, once the Department of Justice has intervened as deeply as they have here, it’s hard to turn a deal around.
If the merger doesn’t happen AT&T may need to cough up $3 billion dollars in cash along with another 3 billion in incentives for T-Mobile.