US States File Lawsuit in Bid to Block Planned Sprint, T-Mobile Merger Over Competition Concerns

Several US states including California and New York filed a lawsuit to stop the tie-up between T-Mobile US (TMUS) and Sprint (S) over claims the deal is anti-competitive and would drive up prices across the country.

The complaint was filed in the US District Court for the Southern District of New York and has New York, California, Colorado, Connecticut, Maryland, Michigan, Mississippi, Wisconsin, Virginia and the District of Columbia listed as plaintiffs. T-Mobile US and Sprint are defendants, as well as T-Mobile parent Deutsche Telekom and SoftBank, the Japanese majority owner of Sprint.

Intense competition, including between T-Mobile and Sprint as lower-cost carriers, has driven down prices and increased coverage and quality for mobile-phone subscribers, according to a statement on Tuesday from New York Attorney General Letitia James.

“When it comes to corporate power, bigger isn’t always better,” James said. “This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”

In May, Ajit Pai, the head of the Federal Communications Commission backed the proposed merger, saying it would advance the country’s push to roll out 5G service and provide more digital service to rural areas. The Justice Department has still to rule on the plan.

James said in the statement that they considered the claims of increased rural coverage, but said T-Mobile hasn’t provided plans on building new cell sites in areas that wouldn’t otherwise be served by either company.

The all-stock merger was announced more than a year ago, with the combined company given an implied enterprise value of $146 billion.

The attorneys general said they found that many of the benefits promised by the companies “were unverifiable and could only be delivered years into the future, if ever.” In the New York statement, Communications Workers of America President Chris Shelton said the action by the states was “a welcome development for American workers and consumers.”

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