WASHINGTON—The U.S. Justice Department is suing to block AT&T Inc.'s proposed $39 billion takeover of T-Mobile USA, saying Wednesday that the combination of the second- and fourth-largest U.S. cellphone companies would hurt competition and likely raise prices.
At a news conference Wednesday, Deputy Attorney General James Cole said the combination would result in tens of millions of consumers facing fewer choices and lower-quality products.
But the agency said the "door is open" to AT&T to propose remedies in the deal.
The proposed tie-up has faced tough opposition from consumer groups and No. 3 carrier Sprint Nextel Corp. since it was announced in March. Shares of AT&T were down 3.7% on the announcement. Shares of Sprint, thought to be a victim of an enlarged AT&T, were 9.6% higher.
[...] The deal would create a giant in mobile telephony that AT&T has argued would provide better service to more of the country. But the Justice Department said in its suit that it would also remove an important challenger—T-Mobile—from the market, reducing pressure on its larger rivals to keep prices down and improve service. T-Mobile has been struggling to compete with the larger carriers, and owner Deutsche Telekom AG has said it isn't willing to invest more in the venture.
And this really cheers me up, too. Nice to see the Justice Department on our side for a change!
A class-action lawsuit against Comcast -- alleging the cable operator violated federal antitrust laws and overcharged subscribers -- is moving forward after a federal appeals court last week affirmed the case's class-action certification.
Behrend v. Comcast Corp., which seeks damages of more than $875 million, was originally filed in December 2003. Attorneys for the six plaintiffs claim Comcast overcharged customers for cable service, after acquiring cable providers in the Philadelphia area and obtaining a monopoly in violation of the Sherman Act.
A three-judge panel for the U.S. Court of Appeals for the Third Circuit ruled 2-1 on Aug. 23 that the class met all the tests for a class action under federal guidelines and concluded the class could show damages using common proof. That upheld a decision by the U.S. District Court for the Eastern District of Pennsylvania holding the question of "common impact" provable with class-wide evidence.
In upholding the lower court's ruling, the appeals panel said, "[W]e hold that the Court did not exceed its permissible discretion in determining that Plaintiffs established by a preponderance of evidence that they would be able to prove through common evidence (1) class-wide antitrust impact (higher cost on non-basic cable programming), and (2) a common methodology to quantify damages on a class-wide basis."
Comcast declined to comment on the ruling.
The suit alleges that Comcast in 1998 began acquiring or engaging in "swaps" for cable systems in the Philadelphia designated market area. That, according to the plaintiffs, increased Comcast's share of subscribers in the Philadelphia DMA from 23.9% in 1998 to 77.8% by 2002, then declining to 69.5% in 2007.
The six plaintiffs, non-basic Comcast cable customers, alleged the operator violated section 1 of the Sherman Act for "imposing horizontal territory, market and customer allocations by conspiring with and entering into and implementing unlawful swap agreements, arrangements or devices." They also charged Comcast violated section 2 of the Sherman Act on theories of monopolization and attempted monopolization.
In addition to claims covering the Philadelphia designated market area, the class-action lawsuit alleges Comcast engaged in similar monopolistic conduct in the Boston and Chicago markets.