The T-Mobile and AT&T merger was a popular one in 2011. The Department of Justice launched an antitrust complaint to stop T-Mobile’s purchase by AT&T Inc as the acquisition would violate antitrust laws. If T-Mobile had merged with AT&T, the merger would be considered a violation of antitrust laws. The antitrust laws strive to uphold economic liberty and preserve unfettered and free competition. The Clayton Act prohibits acquisitions that have high chances of lessening the competition (Stucke & Grunes, 2012). Additionally, the government challenges mergers that may increase consumers’ prices and harm the competition.
The Department of Justice was justified to stop the merger since it dishonored antitrust laws. A combination of T-Mobile and AT&T would lead to multitudes of consumers facing fewer choices, low-quality products, and higher prices. Consumers in the United States, especially those with low incomes and those living in rural areas, rely on competition to access competitive prices for wireless carriers’ services. The merger would dishonor the antitrust laws since it would eliminate competition. T-Mobile provided massive competition to the established wireless carriers through quality enhancements and innovation (Stucke & Grunes, 2012). If the merger had happened, innovation and competition would be reduced, leading to consumers’ suffering.
Verizon, Sprint, T-Mobile, and AT&T accounted for more than ninety percent of wireless networks in 2011. The acquisition would have merged two of the four companies, removing T-Mobile from the market, which has been known to provide value to consumers as well as aggressive pricing. At the time, T-Mobile and AT&T competed head-to-head across the nation in multiple cellular marketing regions. Besides, T-Mobile and AT&T competed nationwide to lure government and business customers in 2011 (Wyatt, 2011). The proposed merger would have eliminated T-Mobile, which had disrupted the market through innovation and low pricing.
References
Stucke, M. E., & Grunes, A. P. (2012). The AT&T/T-Mobile merger: What might have been? Journal of European Competition Law & Practice, 3(2), 196−205. Web.
Wyatt, E. (2011). U.S. moves to block merger between AT&T and T-Mobile. The New York Times. Web.