Ten U.S. states sue to stop Sprint-T-Mobile deal, saying consumers will be hurt

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New York State Attorney General Letitia James speaks at a news conference to announce the filing of a federal lawsuit in partnership with at least 10 U.S. state attorneys general to stop a proposed $26 billion merger of mobile carriers Sprint and T-Mobile in New York, U.S., June 11, 2019. REUTERS/Mike Segar

Diane Bartz, David Shepardson

WASHINGTON (Reuters) – 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 U.S. 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 U.S. 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.”

T-Mobile, whose parent company is Deutsche Telekom AG, and Sprint, controlled by Japan’s SoftBank Group Ltd, did not comment. A spokeswoman for Federal Communications Commission Chairman Ajit Pai declined to comment. The Justice Department did not respond to a request for comment.

Shares of Sprint dropped 6.2% to $6.56 while T-Mobile was down 1.4% at $75.28.

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