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Justin Sullivan, Getty Images

On Wednesday, the US Department of Justice filed suit to stop AT&T’s bid to buy rival cell service provider T-Mobile, saying the acquisition would result in consumers facing “higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest.”

The complaint also said T-Mobile “places important competitive pressure on its three larger rivals, particularly in terms of pricing,” and that its elimination “would remove a significant competitive force from the market.”

If the $39 billion merger goes through, it would leave only three major carriers — AT&T, Verizon and the much smaller Sprint Nextel. In March, Vonya McCann, Sprint’s senior vice president for government affairs, said, “This transaction will harm consumers and harm competition at a time when this country can least afford it.”

After news of the Justice Department’s lawsuit broke, AT&T’s stock price dropped nearly four percent to less than $29, while shares of Deutsche Telekom, T-Mobile’s parent company, fell five percent in trading in Frankfurt.

[The New York Times]

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