Citing potential price hikes for consumers, a coalition of 10 attorneys general are asking a federal judge to block T-Mobile's proposed $26 billion merger with Sprint.
“The combined market share of Sprint and T-Mobile would result in an increase in market concentration that significantly exceeds the thresholds at which mergers are presumed to violate the antitrust laws,” the attorneys general allege in a complaint filed Tuesday in U.S. District Court for the Southern District of New York. “This increased market concentration will result in diminished competition, higher prices, and reduced quality and innovation.”
The proposed merger, announced last year, would leave the country with three major wireless providers -- all around the same size.
Federal Communications Commission Chairman Ajit Pai said last month he will recommend approving the deal based on the companies' promises to build out a 5G high-speed network. T-Mobile and Sprint promised the FCC that the new network will cover 97% of the country within three years, including 85% of rural Americans. The companies also said they won't raise prices for at least three years.
The Department of Justice, which also must approve the deal, hasn't yet said how it will proceed.
The attorneys general who filed suit say the deal will harm consumers, especially low-income consumers who rely on prepaid wireless plans.
“If consummated, the merger will eliminate the competition between Sprint and T-Mobile and will increase the ability of the three remaining [mobile carriers] to coordinate on pricing. The new combined company will also have reduced incentives to engage in innovative strategies to attract and retain customers,” the attorneys general allege.
“The harms faced by low-income subscribers using prepaid service will be particularly pronounced because many low-income subscribers use their mobile handsets as their primary -- or even only -- means of connecting to the Internet,” the complaint reads. New York Attorney General Letitia James is leading the effort to block the deal, while attorneys general from California, Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin joined in the lawsuit.
Some watchdogs cheered news of the lawsuit.
“Blocking this transaction is the right move for American consumers,” Avery Gardiner, senior fellow at the Center for Democracy & Technology, stated Tuesday. “There is a ton of innovation in the mobile space that can only continue if we have vibrantly competitive wireless networks.”
Senator Richard Blumenthal (D-Connecticut), who opposes the proposed merger, on Tuesday reiterated calls for the Justice Department to weigh in against the deal.
“In absence of FCC leadership, a group of State AGs have stepped up to protect the public interest,” he said on Twitter. “@TheJusticeDept must stop dithering & act to block this dangerous deal.”