Typically when businesses move to acquire another company it is pretty smooth sailing, even if the deal has to be approved by various US agencies. Even when IBM sold off its laptop business to the Chinese company Lenovo there wasn’t much more than a cursory overview from those government agencies responsible for watchdogging this type of deal.
So it is no surprise that AT&T figured that their move to acquire competitor T-Mobile would just slide through regardless of the uproar that came from those pesky consumer groups.
Well, hell has frozen over folks because in a surprise move the Department of Justice is suing to block the acquisition of T-Mobile by AT&T using the most obvious,and probably very truthful argument that this deal would “substantially lessen competition” in the wireless market.
This lawsuit has apparently come as a total surprise to AT&T who thought everything was all hunky-dory after several meetings with the DoJ. According to Bloomberg
“We have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated,” Wayne Watts, AT&T’s general counsel, said in a statement. He said the company intends to fight the litigation.
This lawsuit could be one of the most costly ones that AT&T has been involved in because if the acquisition is successfully blocked it would mean that AT&T would have to pay T-Mobile a $3 Billion cancellation fee so it is no surprise that AT&T moved quickly to counter the announcement of the lawsuit by the Department of Justice by saying that they will fight this all the way.
As noted by Stacey Higginbotham at GigaOM the reasons the DoJ stepped in like this are inconsistant with past cases.
A quick read of the complaint shows that the DOJ looked at the merger not at a local level as has historically been the case in wireless merger agreements, but with an eye toward how this affects wireless coverage across the nation. Significantly, it realized the value of mobile data and competition in nationwide mobile broadband access as a reason that this deal would be harmful.
I don’t know about you but I’m going down to the grocery store and stock up on popcorn because this whole thing just started to get interesting.