No company in the world has been a more vocal, constant critic of AT&T's proposed purchase of T-Mobile USA from Deutsche Telekom than Sprint, arguing that the move would create an entrenched duopoly that would put it in the precarious position of having to compete against behemoths Verizon and AT&T alone. To that end, the carrier's taken another step today by filing suit in federal court to block the merger, claiming it would violate Section 7 of the Clayton Antitrust Act. Given the carrier's furious lobbying against the deal, it appears that this suit was always in Sprint's plans, but the DOJ's action last week swung the door wide open, allowing the company to put additional pressure on AT&T while allowing the government to lead the primary charge against the deal.
As a private company suing to block a merger under the Clayton Act, Sprint has to prove how it would be harmed by the transaction, and the filing doesn't mince any words: Sprint says the "brazenly anticompetitive" transaction is a "classic violation of antitrust merger law" that would "leave a swath of victims in its wake." The company's VP of litigation echoed that sentiment in a statement announcing the suit, saying Sprint will "contribute our expertise and resources in proving that the proposed transaction is illegal." There aren't really any substantive arguments in the complaint that Sprint hasn't been making for months already, but it's interesting that it specifically calls out the iPhone as an example of AT&T and Verizon securing competitive advantages in the market because of their size -- while Apple "gave Verizon a time-to-market advantage for the iPhone" when AT&T's exclusivity ended, Sprint says it's "had to compete without access to the iPhone for nearly five years." (All of which suggests the rumors of a Sprint iPhone are dead-on, of course.)
Sprint's filed the case before the same judge as the DOJ case, so it's likely the court will hold a coordinated hearing on both cases at once, since the claims are so similar; Sprint's complaint is just slightly more focused on what might happen to the consumer and competition in general. Sprint also has the ability to introduce additional evidence and arguments about the impact of the merger on the wireless industry -- while it's clear that Sprint agrees with the DOJ about the overall effects of the merger, it might want to try and focus the court's attention on specific arguments the DOJ doesn't make.
Of course, the real question is whether Sprint's suit will have any effect on AT&T in the short term, and that seems somewhat unlikely. AT&T and Deutsche Telekom have both vowed to fight for the deal, and Sprint's complaint likely won't dissuade them from that plan in the near term. The next step is to see what the FCC does and how that affects AT&T: although both the DOJ and FCC have to independently approve the merger, the FCC has never approved a deal first challenged by the DOJ, and the agency says it has "serious concerns" about the deal. A triple-headed hydra of opposition would all but guarantee a decade of antitrust litigation -- we'll see if AT&T rises to the challenge.
Chris Ziegler contributed to this report
Update: AT&T has just put out an official response to the suit, insisting that Sprint isn't looking out in the best interest of customers -- nothing new here, it's just a reiteration of the theoretical stats AT&T has been touting since the merger was announced:
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. We of course will vigorously contest this matter in court as AT&T’s merger with T-Mobile USA will: help solve our nation’s spectrum exhaust situation and improve wireless service for millions; allow AT&T to expand 4G LTE mobile broadband to another 55 million Americans, or 97% of the population; and result in billions of additional investment and tens of thousands of jobs, at a time when our nation needs them most.