Sci-tech

State attorneys general plan to sue to stop T-Mobile-Sprint merger

State attorneys general plan to sue to stop T-Mobile-Sprint merger”

Several state attorneys general are set to file a lawsuit seeking to block T-Mobile's proposed takeover of Sprint on antitrust grounds.

"This is exactly the sort of consumer-harming, job-killing mega-merger our antitrust laws were created to prevent", New York AG Letitia James, who along with California's Xavier Becerra is spearheading the legal challenge, said at a press conference.

The complaint, filed in New York federal court in coordination with California, Colorado, Connecticut, Maryland, Michigan, Mississippi, New York, Virginia, and Washington, D.C., alleges that the merger of two of the four national mobile network operators would deprive consumers of the benefits of competition and drive up prices for cellphone services.

In addition to NY and California, the states attorneys general of Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia, and Wisconsin have joined the lawsuit. The Justice Department's antitrust division is also still reviewing the deal.

Reuters first reported that the ten attorneys general were looking to block the deal. It also promised to sell off Sprint's prepaid Boost Mobile brand and keep price increases on hold for three years.

The lawsuit, led by the attorneys general of NY and California, represents a major legal and political headache that could upend the $26 billion telecom tie-up, which also has divided federal regulators in Washington who must bless the deal in order for it to proceed.

The lawsuit says bluntly: "The proposed commitments Sprint and T-Mobile made to the FCC do not resolve the harms to competition that will result if the merger proceeds". If the deal is approved, each Sprint stockholder will receive.10256 T-Mobile share for each share of Sprint owned.

The concessions also included penalties if they failed to follow through. So with T-Mobile (TMUS) now trading at $75.35, Sprint's stock (S) should be closer to $7.73 than the current $6.58 if investors were 100% confident that the deal is going to go through. If they merge, the complaint states, it would be a disincentive to innovate. FCC Chairman Ajit Pai offered his early blessings last month, along with the support of the commission's two other Republican members, setting it up to clear an agency vote as soon as July.

The two companies previously tried to combine during the Obama administration but regulators rebuffed them. The FCC has gotten on board with the merger, but the Justice Department's Antitrust division is reportedly unhappy with the deal as it now stands.

Regulators have yet to sign off on the deal. Staff attorneys at DOJ have reportedly told the companies they won't approve the deal as proposed, but the ultimate decision lies with Makan Delrahim, the top antitrust official who is a political appointee. Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for consumers.

The state attorneys general join a growing chorus of vocal opponents to the merger. And they say that the companies don't need to combine in order for 5G service to roll out in the US, noting that Sprint has already launched a 5G network in parts of several cities and T-Mobile has separately been working to deploy 5G.

T-Mobile and Sprint have a deadline of July 29 to complete their merger.



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