The US Department of Justice (DoJ) has filed a lawsuit against AT&T's proposed purchase of T-Mobile USA for $39bn, citing market competition concerns.
The acquisition would combine two of the largest wireless carriers in the US if it went ahead.
"The DoJ filed its lawsuit because we believe the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the US facing higher prices, fewer choices and lower quality products for their mobile wireless services," said US deputy attorney general James M. Cole.
"Consumers across the country, including those in rural areas and those with lower incomes, have benefited from competition among the nation's wireless carriers, particularly the four remaining national carriers."
AT&T announced its intention to acquire T-Mobile's US branch in March, and has faced heavy scrutiny from anti-trust authorities and the Federal Communications Commission (FCC).
The company expressed its disappointment with the DoJ decision, and stated that it will challenge the suit in court.
"We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed," said AT&T senior executive vice president and general counsel Wayne Watts.
"The DoJ has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court."
The DoJ's announcement drew strong reactions from opposers and supporters of the deal. User advocacy group Public Knowledge said that it was pleased by the filing.
"AT&T’s effort to recreate 'Ma Cell' by holding rural broadband hostage and threatening American jobs deserves nothing but scorn," said Public Knowledge legal director Harold Fell.
"The FCC should move as quickly as possible to follow the DoJ's lead and reject the merger."
However, the Competitive Enterprise Institute (CEI), which opposes strong government regulation of markets, suggested that rejecting the merger will result in job losses.
"The DoJ lawsuit amounts to a subversion of the evolution of free enterprise and economic progress," said CEI associate director of technology studies Ryan Radia.
"Federal regulators and their arbitrary 'merger guidelines' are woefully ill-equipped to judge the merits of proposed business deals, particularly in dynamic modern markets such as the wireless sector."
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