Millions of AT&T (NYSE: T) and Verizon (NYSE: VZ) customers are trying to unwind T-Mobile’s (NASDAQ: TMUS) $26 billion acquisition of Sprint through a proposed class action lawsuit. The T-Mobile-Sprint deal was announced in 2018, and completed on April 1, 2020, Inside Towers reported.
The U.S. District Court for the Northern District of Illinois, Eastern Division, will decide the outcome of the lawsuit. In the document, the plaintiffs claim that AT&T and Verizon subscribers have had to pay billions of dollars extra for wireless service after the T-Mobile-Sprint deal reduced competition by cutting the number of U.S. mobile operators from four to three. AT&T and Verizon are not part of the latest lawsuit. The proposed suit was filed last year and seeks a range of penalties, up to undoing the T-Mobile and Sprint transaction, according to Reuters.
U.S. District Court Judge Thomas Durkin said in a ruling last week the plaintiffs “plausibly” argued that higher prices stemmed directly from the deal. “The merger closed on April 1, 2020. Just over two years later, Plaintiffs brought this putative class action on behalf of themselves and other AT&T and Verizon customers” against T-Mobile U.S. parent Deutsche Telekom AG, T-Mobile U.S., and T-Mobile U.S. investor SoftBank Group Corp., states Durkin in the decision.
Consumers who filed the suit were concerned the T-Mobile acquisition of Sprint would cause price increases and harm consumers. Those concerns “have come to fruition,” notes Durkin. “Specifically, they allege that the reduced competition following the merger has caused class members to pay billions of dollars more for wireless services than they would have without the merger, in violation of Section 7 of the Clayton Act (15 U.S.C. § 18) and Section 1 of the Sherman Act (15 U.S.C. § 1).”
The suit outlines the plaintiffs’ plans to unwind the merger and “create a viable fourth competitor in the marketplace and recover damages for the overcharges they allegedly paid.” The plaintiffs allege the deal meant that AT&T and Verizon were forced to increase their prices to remain competitive, according to Data Center Dynamics.
It’s not the first time the T-Mobile-Sprint transaction has faced scrutiny, as several states filed a lawsuit to stop the deal from going ahead in 2019. Thirteen states and the District of Columbia sued to stop the deal in the Southern District of New York, notes Reuters. They alleged the transaction would substantially lessen competition. The court favored the defendants and denied the request to stop the deal.
In early 2020, T-Mobile and Sprint settled with the State Attorneys General for Illinois and 11 other states. T-Mobile agreed to additional commitments, including an extension of the consumer pricing commitments from three years to five, low-cost plans, and a nationwide broadband internet access program, Inside Towers reported.
T-Mobile has described the plaintiffs’ damages as “speculative,” while noting that if subscribers are unhappy with higher costs, they should “switch to T-Mobile, not sue it.”
By Leslie Stimson, Inside Towers Washington Bureau Chief
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