Deal could lead to higher prices and poorer quality for consumers, says DOJ
The Department of Justice (DoJ) and Federal Communications Commission (FCC) have said that the proposed AT&T-T-Mobile merger would reduce competition and go against the ineterests of the American consumer.
At&T and T-Mobile are the second and fourth biggest wireless carriers in the US.
The DOJ has filed an antitrust lawsuit against the proposed $39bn merger, saying that it would "substantially lessen competition for mobile wireless telecommunications services" across the country.
The DOJ says that less competition would lead to price hikes, poorer quality services and less innovation.
"The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services," Deputy Attorney General James M. Cole said in a statement.
Federal Communications Commission Chairman Julius Genachowski said, "Competition is an essential component of the FCC's statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition."
AT&T has said that it will challenege the Justice Department's decision.
Earlier this week, AT&T promised to bring 5,000 jobs back to the US if regulators approve the acqusition of T-Mobile.
In March, AT&T and Deutsche Telekom entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction valued at approximately $39bn.
As part of the transaction, Deutsche Telekom will receive an equity stake in AT&T that would give Deutsche Telekom an ownership interest in AT&T of approximately 8% and a Deutsche Telekom representative will join the AT&T Board of Directors.
AT&T has assured that the merger will not cause any job losses for wireless call-centre employees of the two companies who are currently based in the US.
There are nearly 25,000 US-based wireless call-center employees in the two companies.
AT&T has said the deal provides an optimal combination of network assets to add capacity sooner than any alternative, and it provides an opportunity to improve network quality in the near term for both companies' customers.