Facing an antitrust challenge from the Department of Justice and regulatory hurdles raised by the Federal Communications Commission (FCC), AT&T Inc. on December 19 abandoned its planned acquisition of T-Mobile USA Inc. from Deutsche Telekom AG. AT&T said that it decided to call off the acquisition “after a thorough review of options”
The Justice Department Antitrust Division, seven states, and the Commonwealth of Puerto Rico alleged in a complaint filed in the federal district court in Washington, D.C. that the combination of two of the four largest providers of mobile wireless telecommunications services would violate the antitrust laws. (See “Department of Justice Seeks to Block AT&T’s Acquisition of T-Mobile," Trade Regulation Talk, August 31, 2011.)
The FCC staff had reviewed the transaction and found a number of public interest harms. The staff found that the deal would substantially lessen competition in ways that no conditions would appear to remedy. The staff concluded that removing T-Mobile as a competitor would create the incentives for AT&T and other competitors to raise prices.
Government Response
“Consumers won today,” Sharis Pozen, Acting Assistant Attorney General in charge of the Antitrust Division, said in a written announcement. “Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties’ abandonment, we achieved that result.”
The Federal Communications Commission agreed. “The FCC is committed to ensuring a competitive mobile marketplace that drives innovation and investment, creates jobs and benefits Consumers,” FCC Chairman Julius Genachowski said in a brief statement. “This deal would have done the opposite.”
AT&T Statement
In a December 19 press release, AT&T said that it agreed with Deutsche Telecom AG “to end its bid to acquire T-Mobile USA, which began in March of this year.” However, the actions of the Department of Justice and FCC to block the transaction do not change the realities of the U.S. wireless industry, according to the company. “It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.”
AT&T Chairman and CEO Randall Stephenson reaffirmed the company’s commitment to "lead the mobile Internet revolution."
“To meet the needs of our customers, we will continue to invest. However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation’s long-term spectrum needs.”Other Voices
The American Antitrust Institute congratulated the U.S Department of Justice Antitrust Division and the FCC for “bringing to a swift end AT&T’s adventurous test of U.S. merger controls.” Companies planning highly-concentrating horizontal mergers will have to think twice “no matter how much political clout they think they can bring to the table.” Preventing this merger saved many jobs, according to the AAI. “It is an important victory for antitrust and American consumers.”
1 comment:
We definitely do not need a situation where there will be less jobs but both ends say from what I have read that they will create jobs. How can that be? We really do need the competition between companies to keep rates low. Cell phones have become the common and normal way people communicate, and the rates are ridiculous. We really need to have the adversity there so that we can make a choice on what type of cell phone use we would like to have. For most, the cheaper the better.
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