Nobody expected AT&T (NYSE: T) to have an especially easy time convincing regulators to allow it to buy up rival wireless carrier T-Mobile. AT&T announced its intentions last Spring to purchase the fourth-largest U.S. carrier from parent company Deutsche Telekom (NYSE: DT) for US$39 billion, and critics from all corners wasted no time expressing why they thought that would be a very bad idea.
But that's not to say everyone thought it would be impossible. If the prevailing winds of antitrust regulation weren't strong enough to knock Comcast's (Nasdaq: CMCSK) bid for Universal off course, then who's to say AT&T's deal wouldn't eventually fly too?
Now, though, it looks like the proposal has encountered its biggest blow yet, and it may end up crushing the merger completely. The U.S. Department of Justice has filed a civil antitrust suit to block the buyout, claiming such a deal would significantly hurt competition in the U.S. wireless market. If allowed to go through, the purchase would end up hurting consumers through higher prices, diminished service quality, fewer choices and slowed innovation, according to the DoJ.
Just as the suit was announced, the U.S. Federal Communications Commission chimed in with a message of support for the Justice Department's action.
Over the last few months, AT&T has taken every opportunity it could get to convince regulators, watchdogs, consumers, you, me and every other living thing on the planet that the merger was a great idea. Just as the suit was announced, AT&T was busy publicizing a new reason everyone should get behind the deal: jobs. Letting the company buy up T-Mobile would enable it to bring 5,000 outsourced jobs back to the U.S., the company claimed. It's still not clear how many existing U.S. jobs the merger would have eliminated, though.
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