SACRAMENTO, Calif. – The proposed merger between T-Mobile and Sprint hit a big roadblock on Tuesday June 11, as state attorneys general from California, New York and seven other states and the District of Columbia sued to stop the deal, citing antitrust issues.
The two companies provide wireless service to 13 million Californians, including many lower-income families who depend on prepaid plans for internet and cell service.
California Attorney General Xavier Becerra said a merger would kill competition in an already tight market.
“The new company would have more than 50% of the market share in some parts of our great state, including Los Angeles, but also in places like Imperial County,” he said. “That combined market share would exceed the threshold at which mergers are presumed to violate antitrust laws.”
Currently, four wireless companies dominate the U.S. market: AT&T, Sprint, T-Mobile and Verizon. The lawsuit claims that decreased competition inevitably would lead to higher prices. Becerra said studies done in Europe showed a 16% to 20% average price hike when mergers shrank that market from four major players to three.
Sprint and T-Mobile have argued that the merger would allow them to roll out new 5G technology faster and bring it to underserved rural areas. However, Becerra said economic analysis by his office shows California consumers collectively would end up paying $4.5 billion more per year.
“It would result in significant price increases for Sprint and T-Mobile customers, month after month, year after year,” he said, “and the ripple effect of those price increases could cause even greater harm to the market at large, and to customers on other networks.”
Federal Communications Commission Chairman Agit Pai has indicated support for the merger deal. The Justice Department’s antitrust division has yet to issue an opinion.
The lawsuit is online at oag.ca.gov.