Sprint files lawsuit to block merger of AT&T and T-Mobile

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Sprint Nextel has thrown yet another gauntlet at the feet of AT&T, this time suing to block the company’s increasingly troubled bid to take over T-Mobile USA.

If AT&T and T-Mobile were to combine to form the nation’s largest wireless network, Sprint said, the resulting wireless monolith would be strong enough to ‘exclude competitors, raise their costs, restrict their access to handsets, damage their businesses and ultimately to lessen competition.’

Sprint filed the federal suit in the District of Columbia, intending it to be linked to a similar suit filed by the Department of Justice last week. Both suits claim the merger would violate antitrust laws designed to prevent the formation of monopolies and duopolies, in which entire markets are controlled by one or two companies.

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

But AT&T wasted little time in returning fire, and sought to undermine Sprint’s effort to portray itself as a defender of consumer welfare.

‘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 its statement. ‘We of course will vigorously contest this matter in court...’

Sprint’s fate could well hinge on the outcome of the merger. The company has been hemorrhaging money and subscribers, and its stock value has dropped more than 20% since the beginning of the year. In a world dominated by the much larger pairing of AT&T/T-Mobile and Verizon Wireless, Sprint could be crowded out.

Alternately, Sprint could try to buy T-Mobile if AT&T doesn’t succeed, making itself into a much larger third competitor to the two leaders. Sprint has not commented on this possibility.

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-- David Sarno