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Posted at 02:03 PM ET, 09/06/2011

Sprint files suit to block AT&T, T-Mobile merger


Dan Hesse, chief executive officer of Sprint Nextel Corp., right, looks on as Philipp Humm, president and chief executive officer of T-Mobile USA Inc., speaks during a Senate Judiciary Committee hearing on the AT&T/T-Mobile merger in Washington, May 11, 2011. (Andrew Harrer - BLOOMBERG)
Update at 4:11 p.m. with AT&T comment.

Sprint Nextel on Tuesday filed a complaint in federal court aiming to block AT&T’s $39 billion bid for T-Mobile.

The suit follows the Justice Department’s lawsuit filed last week, also trying to prevent the merger between the nation’s second- and fourth-largest wireless carriers.

Sprint Nextel said in its suit, filed in the U.S. District Court of the District of Columbia, that AT&T’s proposed merger with T-Mobile would violate antitrust laws. By taking legal action, Sprint creates a record of its objections to the controversial merger and gains another platform to fight against the transaction.

Stifel Nicolaus analyst Rebecca Arbogast said the suit is also significant because “it would keep the challenge alive in court even if DOJ were to drop its case against the merger.”

The lawsuit filed by Sprint, a staunch critic of the deal since it was announced last March, was assigned to Judge Ellen Huvelle, the same judge who will hear the Justice Department’s suit against the merger.

Sprint has consistently argued that the merger would hobble its business and effectively end its ability to survive on its own.

“With today’s legal action, we are continuing that advocacy on behalf of consumers and competition, and expect to contribute our expertise and resources in proving that the proposed transaction is illegal,” said Susan Z. Haller, Sprint’s vice president of litigation.

Justice officials last week argued that the merger would create a duopoly in the cellular market that would lead to fewer choices for consumers, higher bills and less innovation in the thriving market for smartphones and other wireless devices.

AT&T criticized Sprint’s suit. AT&T argues its deal will mean more consumers will get its broadband mobile services. Sprint and consumer groups argue that the merger will create a duopoly wireless landscape that will inevitably lead to higher prices and fewer competitors.

“This simply demonstrates what we’ve said all along – Sprint is more interested in protecting itself than it is in promoting competition that benefits consumers,”AT&T said in a statement. “We of course will vigorously contest this matter in court.”

AT&T has said it will continue to fight for its merger. It hopes to reach a settlement with Justice, but says it will defend the deal in court if there’s no agreement.

AT&T will have to pay an estimated $6 billion in cash and spectrum assets to T-Mobile if the deal isn’t complete by September, 2012. But according to a filing with the Securities and Exchange Commission, the company may not have to pay that penalty if conditions and costs associated with the deal exceed $7.8 billion. The New York Times first reported Friday.

Related:

AT&T prepares fight, settlement with Justice

FAQ: AT&T, T-Mobile, DOJ

Merger in hands of Judge Huvelle

By  |  02:03 PM ET, 09/06/2011

 
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