Democratic state AGs sue to block T-Mobile-Sprint merger
Ten Democratic attorneys general from nine states and Washington, D.C., on Tuesday filed a lawsuit to block the $26 billion T-Mobile-Sprint merger, arguing that combining two of the country’s four largest mobile carriers could harm competition and drastically raise prices for consumers.
The attorneys general, led by New York’s Letitia James and Xavier Becerra of California, filed the federal lawsuit in the Southern District of New York on Tuesday. Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin have also joined the effort.
“When it comes to corporate power, bigger isn’t always better,” James said in a statement. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country.”
Where federal regulators stand: The states are moving to block the merger shortly after the Federal Communications Commission (FCC) last month said it will green lightthe lucrative deal. The merger still needs approval from the Department of Justice (DOJ), which has not yet made its decision.
Both James and Becerra during press briefings on Tuesday denied that they are taking action now in order to increase pressure on the DOJ to reject the merger.
“We’ve concluded our investigation and we have our own responsibility to consumers,” James said during a press conference in New York City. “Based upon our review, this is bad for consumers, bad for innovation, bad for lowering prices and bad for competition.”
The state investigation: Before filing the lawsuit, the states engaged in a year-long investigation into the merger to gauge how it could potentially affect consumers in the country. They now say they have determined that the merger as proposed violates the country’s antitrust laws.
James’s office said in a statement that states determined the promises of “lightning-fast speeds and increased capacity” from T-Mobile and Sprint were “unverifiable and could only be delivered years into the future, if ever.”
The attorneys general in the lawsuit are arguing that the deal could raise prices for consumers by at least $4.5 billion a year.
Becerra in a statement said they could not find evidence to substantiate claims that the merger could create “faster, better and cheaper service.”
T-Mobile and Sprint in filings have promised to build out a next-generation wireless network, also known as 5G, that would cover almost all Americans within six years.
They have also pledged to pay “voluntary contributions” to the Treasury Department instead of regulatory fines if the FCC determines that the new company has not followed through on any of the conditions of the merger. The FCC approved the deal on the basis that the mobile carriers will provide widespread 5G coverage to rural areas and create a new in-home broadband service.
But Becerra said the states made the decision to file a lawsuit based on “facts” rather than “promises” from the companies.