New York State Attorney General Letitia James is leading a group of states in challenging T-Mobile’s controversial merger with Sprint — an unusual legal salvo that throws the $26 billion deal into doubt.
James — joined on Tuesday by her counterparts in eight other states and the District of Columbia — sued to block the megamerger between the wireless carriers, arguing that a deal would mean higher prices for consumers.
“When it comes to corporate power, bigger isn’t always better,” James told reporters gathered at her Manhattan offices.
A merger of the nation’s No. 3 and No. 4 telecom giants would mean “diminished competition, higher prices, and reduced quality and innovation,” according to the complaint filed in New York federal court by attorneys general from states including New York, California and Connecticut.
James said negotiations with the Justice Department, Sprint and T-Mobile are “ongoing” but that the deal as it stands — which would cut the number of nationwide wireless carriers from four to three — “violates antitrust laws.”
The DOJ has yet to complete its review of the merger. As reported by The Post, the DOJ last month was notified about the Federal Trade Commission’s surprise endorsement of the merger — a sign that the DOJ is poised to approve it.
“The states’ action suggests they saw the writing on the wall and wanted to get ahead of it,” a former DOJ official said, indicating that James must have believed the DOJ was about to approve the merger.
Now, the state AGs may have handcuffed the DOJ, as it will be very hard to approve a merger while a lawsuit is pending against it, the former DOJ official said.
“It’s a well-written complaint,” a lawyer requesting anonymity who is reviewing the situation for a hedge fund said. “The AGs will likely be granted a temporary restraining order stopping the merger.”
James did not consult with the DOJ, which is reviewing the merger before filing the suit, two sources with direct knowledge of the situation said.
“I don’t believe that we have an obligation to provide the DOJ with notice,” she said when asked Tuesday whether the DOJ had received a heads-up from the state AGs.
“We’re going to continue with our litigation. Whether or not the DOJ approves this merger or not we have a responsibility to move forward and protect consumers,” James said.
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T-Mobile, which has already agreed to sell pre-paid carrier Boost Mobile, could also offer to sell enough wireless spectrum to help a new entrant form a fourth national wireless carrier.
That’s a concession that has been pushed for by the DOJ, according to sources, although some critics are skeptical whether it would work.
“I personally don’t know how the DOJ can stand up a legitimate fourth mobile provider in the market that would compete anytime soon,” Gigi Sohn, a distinguished fellow at the Georgetown Law Institute for Technology Law & Policy, told The Post.
Shares of Sprint fell 5.9%, while T-Mobile shares dropped 1.6%.
Reps from T-Mobile and Sprint did not respond to requests to comment.