Virginia, eight other states and the District of Columbia filed a lawsuit Tuesday to block the proposed merger of Sprint and T-Mobile, thinking the combination of the country’s third- and fourth-largest wireless carriers would threaten competition and harm consumers.
The suit, led by the attorneys general of New York and California, represents a major legal and political headache that could upend the $26 billion telecom tie-up, which also has divided federal regulators in Washington who must bless the deal for it to proceed.
“The cost of mobile phone service has actually dropped significantly in recent years, but this proposed merger would likely lead to increased costs, fewer choices, and less innovation in the market,” said Virginia Attorney General Mark R. Herring.
In bringing their case, the 10 attorneys general argued that Sprint, which is owned by the Japanese conglomerate SoftBank, and T-Mobile, which is operated by Germany’s Deutsche Telekom, would have incentive to raise prices and reduce service quality if they’re allowed to merge.
While the two companies long have said their combination would help them deploy next-generation wireless services, known as 5G, the states questioned if the two carriers could actually live up to their commitments to deliver better mobile broadband nationwide.
Attorneys general from New York, California, Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin filed the lawsuit in federal court in New York.
“Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for consumers,” they wrote in their complaint.
“The cumulative effect of this merger, therefore, will be to decrease competition in the retail mobile wireless telecommunications services market and increase prices that consumers pay for mobile wireless telecommunications services,” the attorneys general continued.
Spokespeople for Sprint and T-Mobile did not respond to requests for comment.
In Washington, regulators at the Federal Communications Commission — who have reviewed the transaction to determine if it’s in the public interest — appear on track to approve the deal. FCC Chairman Ajit Pai offered his early blessings last month, along with the support of the commission’s two other Republican members, setting it up to clear an agency vote as soon as July.
But officials at the Justice Department, who are reviewing the deal on antitrust grounds, have expressed hesitation.