Lawsuit aiming to block T-Mobile-Sprint merger filed by group of US state AGs

New York Attorney General's office filed a multi-state lawsuit Tuesday in a bid to block the proposed T-Mobile-Sprint merger, alleging that combining the two major U.S. wireless carriers would "deprive consumers of the benefits of competition and drive up prices for cellphone services."

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New York Attorney General Letitia James and Attorney General Xavier Becerra were among the 10 state Attorneys General filing the lawsuit to stop the $26 billion deal. Among the states that joined the complaint were Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin.

“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.”

“That’s why we are going to court to stop this merger and protect our consumers because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent,” she added.

News of the lawsuit, which FOX Business confirmed earlier Tuesday, caused shares for T-Mobile and Sprint to plummet.

TickerSecurityLastChangeChange %
SSPRINT CORP.5.83-0.04-0.68%
TMUST-MOBILE US INC78.07+1.23+1.60%

The suit stated that T-Mobile and Sprint were the lower-cost carriers among the “Big Four” wireless carriers, which include Verizon Wireless and AT&T. The Attorneys General said they conducted an investigation into T-Mobile and Sprint’s promise to give customers lightning-fast speeds and increased capacity and found that the alleged benefits were "unverifiable and could only be delivered years into the future, if ever."

“Any theoretical efficiencies that could be realized from the merger would be outweighed by the transaction’s immediate harm to competition and consumers,” the New York Attorney General’s Office argued in a statement. “Additionally, the merger would harm thousands of hard-working mobile wireless independent dealers in New York and across the nation.”

FOX Business reported Monday that the Department of Justice antitrust chief Makan Delrahim and Federal Communications Commission Chairman Ajit Pai met Friday to discuss the proposed multibillion-dollar deal. People with direct knowledge of the government’s activities say a final government decision on the merger could come as early as this week.

Pai and the GOP commissioners have publicly voiced strong support for the deal, saying the antitrust concerns were overblown and the combined company will help foster competition because it will be better prepared to compete against wireless leaders AT&T and Verizon. The FCC commissioners join both President Trump and economic officials in the White House, who believe a stronger combined company will help the U.S. compete against foreign outfits in the area of superfast fifth generation wireless technology, thus creating millions of jobs and adding to economic growth.

The deal still faced stiff resistance from the DOJ staff attorneys who argue the combination will reduce competition and possibly lead to higher wireless prices.

Robert McDowell, T-Mobile’s outside counsel and former commissioner of the Federal Communications Commission, told FOX Business in May that he was confident the $26 billion deal would move forward with federal approval.

"The DOJ will give this a green light," McDowell claimed.

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The proposed merger would bring the number of major wireless carriers in the nation from four down to three.

Fox Business' Lydia Moynihan and Charles Gasparino contributed to this report.