The Department of Justice has amended its antitrust suit against AT&T's $39 billion buyout of T-Mobile USA, adding seven state attorneys general to the case.
A group of bipartisan attorneys general from California, New York, Illinois, Washington, Ohio, Massachusetts and Pennsylvania signed on to the complaint, arguing the mega-merger would have a detrimental effect on competition in the wireless industry.
"We are pleased that these states have joined the department in its lawsuit," the DOJ said in a widely reported statement, adding that the states provided "invaluable assistance" during its investigation into the deal. "Together, we will seek to protect consumers from the anticompetitive harm that would result from this proposed transaction."
AT&T downplayed the significance of the news, citing support from 11 other state attorneys general for the merger.
"It is not unusual for state attorneys general to participate in DOJ merger review proceedings or court filings," an AT&T spokeswoman said. "On a parallel path, we have been, and remain, interested in a solution that addresses the DOJ's issues with the T-Mobile merger."
T-Mobile expressed optimism about the deal's chances of success.
"We remain confident that the facts will prevail and the acquisition will proceed," T-Mobile government affairs executive Tom Sugrue said, citing the "numerous benefits" of the transaction.
Sprint government affairs executive Vonya McCann said the addition of the states to the complaint validated the DOJ's arguments against the deal.
"After a comprehensive review of the facts related to AT&T's proposed takeover of T-Mobile, seven state attorneys general have reached the same conclusion as the U.S. Department of Justice: This proposed takeover violates antitrust law and would harm consumers, competition and our nation's economy," McCann said.
States generally lack jurisdiction to block mergers, but the amended complaint will allow them to present the court with evidence from their investigations into the deal's potential anti-competitive impact. It will also give them a seat at the table as the DOJ and AT&T negotiate a possible settlement. Sprint has also filed a related suit against the transaction in the same court, giving voice to its strident opposition to the transaction.
Public Knowledge President Gigi Sohn said the advocacy group was "pleased" with the suit.
"Their participation is an indication that states, too, recognize the tremendous harm that this deal would cause to consumers across the country and to our economy generally, and that they do not agree with AT&T's claims of benefits from the deal, including the creation of new jobs," she said.
The latest twist in the case comes one day after a group of 15 House Democrats sent a letter to President Obama asking him to "swiftly resolve concerns" about the merger, arguing the deal would create between 55,000 to 96,000 new jobs. The jobs claim has been questioned by some experts who say the transaction would inevitably lead to layoffs.