Question of the Week & Talk Back: Will AT&T Prevail Against DOJ or is T-Mobile Deal DOA??

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The Obama administration on Wednesday sued to stop AT&T from acquiring its smaller rival, the cellphone carrier T-Mobile.

Personally, I’m in favor of breaking up the deal, for at least three reasons.

  1. It does seem anticompetitive, in that a consummated deal would leave us with two big wireless competitors — AT&T and Verizon — and one weak one, Sprint, putting us well down the road to a duopoly.
  2. If you want better deals, the little guys are the ones who have them. Both AT&T and Verizon throttle your data — you iPhone users know who you are. On the other hand, Sprint ($70 a month for unlimited voice, data and text) and T-Mobile ($50 a month per phone when you have two) may not have the hottest handsets, but they do offer more generous plans.
  3. Finally, a completed deal would mean the loss of T-Mobile spokesmodel Carly Foulkes in favor of whatever bland advertising AT&T has. And that, my friends, is too much for us to take.

For its part, AT&T issued a statement that reads, in part:

“We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated.

“We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.”

What are AT&T’s chances of prevailing in a court fight? The last big antitrust case I can recall was the Clinton administration’s attempt to break up Microsoft, and we know how that one turned out.

The other thing, ironically enough, is that the U.S. antitrust suit was filed on the same day that Sony, Toshiba and Hitachi announced plans to consolidate their manufacturing of liquid-crystal display technology by forming a new company, all with the support of the Japanese government, and $2.6 billion of government-backed funds, to fight competition from South Korea and Taiwan.

Do they live in the same world as we do? Should Japan act more like the United States or should we act more like them? Feel free to sound off in the comments.

Steve Bills is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @Steve_Bills. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at greg.winterton@thomsonreuters.com.