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Tuesday, September 06, 2011, 11:20 am PT (02:20 pm ET)

Sprint files lawsuit to block AT&T's proposed purchase of T-Mobile

Sprint on Tuesday filed a lawsuit against AT&T, Deutsche Telekom and T-Mobile in an effort to block a proposed merger of the wireless carriers.

Sprint's complaint, filed in the District of Columbia, is a related case to the Department of Justice's own antitrust lawsuit filed last week. Sprint is the third-largest wireless carrier in the U.S. and is looking to block AT&T's proposed purchase of T-Mobile, the fourth-largest carrier.

"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 Z. Haller, vice president-Litigation with Sprint, said in a statement.

In its lawsuit, Sprint alleges that an AT&T takeover of T-Mobile would hurt wireless competition in the U.S., and would be bad for consumers. The complaint argues that AT&T's purchase of T-Mobile would:
  • Harm retail consumers and corporate customers by causing higher prices and less innovation.
  • Entrench the duopoly control of AT&T and Verizon over the nearly one-quarter of a trillion dollar wireless market. Sprint argues that AT&T and Verizon would control more than three-quarters of the market and 90 percent of the profits.
  • Sprint also believes the deal would hurt it and other independent wireless carriers by allowing AT&T an increased market position to exclude competitors, raise their costs, restrict access to handsets and lessen competition.

Last week, the Justice Department said in its own lawsuit that the elimination of T-Mobile as an "independent, low-priced rival" would eliminate a "significant competitive force" from America's wireless industry. The government believes the $39 billion deal would "substantially lessen competition."

AT&T


AT&T announced in March that it hopes to acquire Deutsche Telekom's American T-Mobile subsidiary in a cash and stock deal worth $39 billion. The deal would give Deutsche Telekom an 8 percent stake in AT&T.

Sprint's lawsuit is not a surprise, as back in May the carrier formally petitioned the proposed deal to the Federal Communications Commission. In that filing, Sprint accused AT&T of wasting its spectrum and taking a shortcut by purchasing T-Mobile to acquire more.

Executives from Sprint have also attempted to convince the government that AT&T's purchase of T-Mobile could hurt its profitability. "When one competitor has that much buying power they can determine the fate of different products," said Farib Adib, a Sprint executive in charge of handsets.

Currently, Apple's iPhone is only available on AT&T and Verizon, the two largest wireless networks in the U.S. But Sprint is rumored to gain the iPhone as well when Apple's anticipated fifth-generation handset launches as expected in the coming weeks.