AT&T / T-Mobile Merger Hits A Justice Department-Sized Snag

Well, this isn't looking good for those already planning to attend the marriage of T-Mobile USA and AT&T.

While it was starting to look as if the proposed merger would end with the two holding hands and riding off into the sunset, things have taken a dramatic turn today. The U.S. Department of Justice filed court papers in Washington to block the $39b acquisition, suggesting that the deal would "substantially lessen competition" in the market. Not surprisingly, AT&T's shares dropped 5 percent.

That's probably because AT&T will be forced to pay T-Mobile's parent company (Deutsche Telekom AG) a staggering $3 billion if this doesn't go through, and would need to sell a ton of iPhone plans to make up that loss. The filing said the following: "AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market." This isn't the end of the journey, not by a long shot, but it's clear that AT&T has a battle on their hands now.

Despite promising that 5000 U.S. jobs would be created if the merger happened, other reports suggested that T-Mobile was already preparing severance plans in case things worked out. Either way, this shows that the government is indeed paying attention, and that antitrust law is still a big deal.
Tags:  ATT, T-Mobile, Merger