Merger deal between two telecom behemoth was bound to get very close scrutiny, but looks like things are going to be far more difficult
than anticipated. According to the latest reports, The US government has filed a lawsuit against the proposed acquisition of T-Mobile by AT&T. The deal was first announced in March this year and since then it has attracted massive opposition.
The first wave of opposition was generated by Sprint, the closest competitor of T-Mobile. Sprint is running the risk of being a very distant third placeholder in the US telecom arena, if AT&T becomes successful in acquiring T-Mobile. Sprint claimed that the acquisition would lead to stifling of fair competition in the segment. AT&T, on the other hand claimed that the merger would give boost to 4G coverage in the US and would also provide better call quality.
The deal had faced criticism and opposition right from the beginning. The Computer & Communication Industry Association had also been vocal about its opposition to the deal. And now the US government has asked Department of Justice to declare that the deal is in violation of anti-trust laws.
The latest twist in the story may have brought a little reprieve for Sprint, but it is going to cause major headache to AT&T. The company would be liable to pay $6 billion to T-Mobile, if the deal fails to materialize. In its statement, AT&T said that it would ask for "an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court."