Sprint Nextel Corp. (S) sued to block AT&T Inc.’s proposed $39 billion purchase of wireless carrier T- Mobile USA Inc. less than a week after the U.S. Justice Department moved to halt the transaction.
Sprint, the third-biggest U.S. wireless operator, filed an antitrust lawsuit today in federal court in Washington, saying the deal would harm consumers and weaken Sprint’s ability to compete with AT&T and Verizon Communications Inc. (VZ) The case was assigned to U.S. District Judge Ellen Segal Huvelle, who is overseeing the government’s suit against the acquisition.
“In one fell swoop, AT&T’s proposed purchase would eliminate one of four national competitors and marginalize a second (Sprint), pushing the market back toward a 1980s-style cell phone duopoly,” Sprint said in its 68-page complaint.
Makan Delrahim, a lawyer with Brownstein Hyatt Farber Schreck LLP in Washington who’s not involved in the litigation, said Sprint wants the cases consolidated because it may add “some legal and economic firepower to the government’s” suit and give the company a role in any settlement talks.
“The government will probably resist consolidation,” said Delrahim, a former deputy assistant attorney general for antitrust under President George W. Bush. “It wants to have maximum flexibility and control. Sometimes private cases do get consolidated, but often not.”
The U.S. Justice Department sued Dallas-based AT&T and Deutsche Telekom AG (DTE)’s T-Mobile unit on Aug. 31, saying a combination of the two companies, which would make AT&T the biggest U.S. wireless carrier, would “substantially” reduce competition. Sprint said in a statement today that the deal would lead to higher prices for mobile-phone users.
“With today’s legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal,” Susan Haller, Overland Park, Kansas-based Sprint’s vice president for litigation, said in the statement.
AT&T, saying that it will fight the suit, said in a statement in an e-mailed statement that it shows “Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers.”
Section 4 of the Clayton Act states that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws” may sue in federal court. If successful, Sprint could seek triple damages and attorney fees, according to the law.
Sprint’s lawyers on the lawsuit are from the New York and Washington offices of Skadden, Arps, Slate, Meagher & Flom.
The case is Sprint Nextel Corp. v. AT&T Inc. (T), 11-cv-01600, U.S. District Court, District of Columbia (Washington). The government’s case is U.S. v. AT&T Inc., 11-cv-01560, U.S. District Court, District of Columbia (Washington).
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