New York Sues To Block Sprint, T-Mobile Merger

NEW YORK — New York and eight other states filed a lawsuit Tuesday to block T-Mobile and Sprint from merging, putting another obstacle in front of the cellphone service providers' massive deal.

The merger of the nation's third- and fourth-largest cellular companies threatens to decrease competition in the wireless telecommunications market and drive up prices for consumers, the nine states and the District of Columbia argue in the Manhattan federal court complaint.

The states say the merger violates federal antitrust law. Their lawsuit asks the court to block Sprint, T-Mobile and their parent companies from carrying it out.

"We won’t allow New Yorkers or any Americans across the country to foot higher bills just so that T-Mobile and Sprint can make a larger profit," New York Attorney General Letitia James said.

The lawsuit brought by 10 Democratic attorneys general is just the latest sign of trouble for the $26.5 billion merger, which the two companies announced in May 2018.

While the deal has support from the head of the Federal Communications Commission, the U.S. Department of Justice may not approve it because the firms have not sufficiently addressed concerns about harm to competition, Bloomberg reported last month.

The deal, in which T-Mobile would take over Sprint, would reduce the number of major wireless providers in the U.S. from four to three. The companies have said the merger would increase network capacity, drive down prices and improve access to service for rural Americans.

But the potential harms of the deal outweigh its supposed benefits, which are "speculative, non-verifiable, and not merger specific," the states' lawsuit says.

Competition has helped drive down the average cost of mobile service by about 28 percent over the last decade, James said, attributing the figure to the Labor Department. But the average American household still spends roughly $1,100 a year on cellphone service, she said.

The new, bigger company — which would have more than half the mobile subscribers in the New York City area — would be able to raise prices and cut quality, and consolidation could lead to the loss of jobs and lower pay, the states argue.

The merger could especially hurt low-income households who rely on prepaid phone service, which would likely see price hikes if the deal goes through, according to the complaint.

"Low-income consumers ... already have very little power when dealing with providers of these critical services," said Mae Grote, the CEO of the Financial Clinic, a nonprofit that helps poor people with financial security. "Reducing the scope of their choices puts them more at risk of being subject to unfair or abusive practices."

Sprint and T-Mobile did not immediately respond to requests for comment on the lawsuit.