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AT&T fights back at U.S. challenge of T-Mobile deal

A view shows the AT&T store sign in Broomfield, Colorado
A view shows the AT&T store sign in Broomfield, Colorado

WASHINGTON (Reuters) - AT&T Inc and T-Mobile USA fought back against the Justice Department's challenge to their proposed merger, arguing the deal would "usher in more intense competition."

AT&T and T-Mobile, owned by Deutsche Telekom AG, argued in a federal court filing on Friday that the massive $39 billion deal would free up spectrum and create new capacity for Americans whose mobile devices are transmitting increasingly large amounts of data.

"The Justice Department's complaint fails to come to grips with the significant efficiencies this transaction will generate," the companies said in their filing.

In the brief, AT&T asked the court to allow its purchase of T-Mobile to go forward and to require the Justice Department to pay its costs in the challenge.

The Justice Department filed a lawsuit aimed at stopping the deal last week, saying the acquisition of T-Mobile USA, the No. 4 carrier, by AT&T, the No. 2, would harm competition in the wireless market and lead to higher prices.

The department, in particular, seemed determined to preserve T-Mobile as an innovative, discount carrier that held down wireless prices.

Responding to that concern, AT&T said "T-Mobile is not a unique or material competitive constraint on AT&T."

"T-Mobile has not been a meaningful or unique innovator in terms of network development and deployment, nor is it likely to become one in the foreseeable future," AT&T said in the filing with the U.S. District Court for the District of Columbia.

The deal partners took issue with the Justice Department's review of the effect of the merger on a national basis instead of on a local basis. They argued that more than 90 percent of U.S. consumers currently have at least five wireless carriers to choose from in their local markets.

They also disputed the method the Justice Department used to analyze the deal, saying it was too simplistic.

If the merger goes through, AT&T will unseat Verizon Wireless as the No. 1 U.S. mobile carrier. Verizon Wireless is a venture of Verizon Communications Inc and Vodafone Group Plc.

"We continue to believe this transaction as currently proposed is anti-competitive and harmful to consumers," Justice Department Spokesperson Gina Talamona said. "We will respond further in our court filing."

The lawsuit is the biggest antitrust challenge yet by the Obama administration.

The case is the Department of Justice v. AT&T, T-Mobile USA, U.S. District Court, District of Columbia, No. 11-01560.

(Reporting by Sinead Carew and Diane Bartz; editing by Gary Hill, Tim Dobbyn and Andre Grenon)

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