AT&T responds to Justice Department lawsuit

The telecom giant says the Justice Department fails to grasp the benefits of the deal and is wrong in its characterization of competition in the industry.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
3 min read

AT&T filed a response to the Justice Department's lawsuit to block the merger with T-Mobile USA today, claiming the agency fails to understand the benefits of the deal and isn't painting an accurate picture of the competitive environment.

The Dallas telecommunications giant largely brought up the same arguments it first made to regulators: that the deal would allow AT&T to gain access to more spectrum, let the company provide wireless broadband access to more people, and that it would provide more competition in an already competitive industry. The filing also contains specific responses denying multiple claims made in the Justice Department lawsuit.

"The Department of Justice's complaint fails to come to grips with the significant efficiencies this transaction will generate," AT&T said in its filing. "(The) complaint similarly fails to depict accurately the state of competition in mobile telecommunications today, the dynamic nature of the wireless industry, or the pro-competitive and pro-consumer impact of this transaction."

AT&T also took exception to the use of the term, the "Big Four," since there it argues there are usually more than four competitors in each market. The term, however, is often used in the industry to refer to the four nationwide carriers. Consumer advocate groups and smaller companies led by Sprint Nextel have used this argument in their push to stop the deal.

AT&T also argued that blocking the deal will do little to help T-Mobile, which continues to lose customers and doesn't have the necessary spectrum to move to a 4G network. It said that competition would actually be hurt if T-Mobile were left alone because parent Deutsche Telekom has said it wouldn't invest in the business. The company added that T-Mobile's "disruptive pricing" plans aren't affecting AT&T now.

"Blocking this transaction will not help T-Mobile or its customers," AT&T said in its filing.

AT&T has long sought to position the merger review to look at competition on a market-by-market basis, where it claims multiple competitors exists. But the Justice Department has opted to look at competition in a national level, with one out of the four national players getting swallowed up by another.

AT&T, however, also expressed its willingness to work with the agency.

"At the same time, we have been and remain interested in a solution that addresses the DOJ's issues with the T-Mobile merger," the company said in an e-mailed statement alongside the filing.

The deal was put in serious jeopardy after the DOJ surprisingly filed its suit last week. While not dead, most analysts believe there's a significantly lower chance that AT&T will be able to push the deal through. The telecom giant has been left scrambling to find a compromise, including the promise to bring back 5,000 outsourced call center jobs and sell off significant chunks of T-Mobile as concessions.

AT&T and the Justice Department are scheduled to present their case to Judge Ellen Huvelle during a hearing that starts on September 21

AT&T also said in the statement that it remains confident that it would close the deal.