Justice officials said the outcome of the deal, which would combine the second- and fourth-largest wireless companies, made their decision clear.
“Unless this merger is blocked . . . consumers will suffer,” said Sharis A. Pozen, acting assistant attorney general in Justice’s Antitrust Division. “Any way you look at this transaction, it is anti-competitive.”
The Justice Department did battle with an earlier version of AT&T, famously breaking up “Ma Bell” in 1984. But since then, AT&T has reestablished itself as one the best-connected companies in Washington, armed with a massive lobbying operation.
Justice’s decision comes at a sensitive time for President Obama, who is launching his reelection campaign and facing complaints from businesses that his administration is getting in the way of efforts to spur economic growth and create jobs.
Deputy Attorney General James M. Cole said Wednesday that the department’s decision would actually “protect jobs in this economy.”
For months, AT&T has been arguing the opposite, saying the merger would put “tens of thousands” of people to work by bringing wireless high-speed Internet access to an additional 55 million Americans.
In a show of goodwill, AT&T senior executives on Tuesday met with Justice officials to tell them that they would bring 5,000 call-center jobs back to the United States from overseas. The executives got no hint that a day later Justice would file suit, according to a source familiar with the meeting.
“We are surprised and disappointed by today’s action,” AT&T General Counsel Wayne Watts said in a statement. He said the company would ask the U.S. District Court for the District of Columbia for an expedited hearing. “We remain confident that this merger is in the best interests of consumers and our country, and the facts will prevail in court.”
AT&T has a lot to lose. If the merger does not conclude by September 2012, the company will have to hand over $3 billion worth of wireless spectrum and other assets to T-Mobile’s parent company, Deutsche Telekom. AT&T would also have to pay $3 billion in cash, which would be the largest breakup fee in history, according to Thomson Reuters.
AT&T’s stock dropped 3.8 percent, to $28.48, on Wednesday. Shares of Sprint Nextel, the nation’s third-largest carrier, rose 5.9 percent, to $3.76. Sprint had warned that its business couldn’t survive if the merger was approved, and it had been interested in buying T-Mobile before AT&T’s bid.