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Justice Department seeks to block AT&T, T-Mobile merger

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AT&T Inc.’s proposed $39 billion buyout of T-Mobile USA Inc. hit a roadblock today when the Department of Justice filed a lawsuit to block the deal over concerns that the merger would reduce wireless market competition, MSNBC reported.

“The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” Deputy Attorney General James Cole said at a news conference.

AT&T said it would fight and ask for an expedited court hearing “so the enormous benefits of this merger can be fully reviewed.” The company said the government “has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court.”

The deal has faced tough opposition from consumer groups and No. 3 carrier Sprint Nextel Corp. since it was announced in March.

Four nationwide providers — Verizon Wireless, AT&T, T-Mobile and Sprint — account for more than 90 percent of mobile wireless connections.

The Justice Department’s complaint, filed in federal court in Washington, D.C., asserts that AT&T and T-Mobile compete directly nationwide, including in 97 of the country’s 100 largest cellular marketing areas. In addition, they compete for business and government contracts.

“Were the merger to proceed, there would only be three providers with 90 percent of the market, and competition among the remaining competitors on all dimensions — including price, quality, and innovation — would be diminished,” Cole said.