Sen. Herb Kohl, D-Wis., who chairs the Senate's Antitrust Subcommitteee, is calling for regulators to block the proposed merger of AT&T and T-Mobile, saying on Wednesday that it would be "highly dangerous to competition and consumers."
Kohl wrote to the Justice Department and the Federal Communications Commission to argue that the merger would concentrate the market too much.
"I have concluded that this acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies," he wrote.
The senator's letter provides political cover to the FCC and Justice if they want to either block the proposed $39 billion merger outright or impose stringent conditions. The approval process is expected to last until at least the end of the year.
Kohl noted that cell phones are a daily necessity. “Therefore, in this industry, perhaps more than any other, full and vibrant competition is essential so that all consumers realize the benefits of this technology at the best prices and with the most choices.”
An AT&T spokesman disputed Kohl's assessment.
“We ... feel his view is inconsistent with antitrust law, is shared by few others, and ignores the many positive benefits and numerous supporters of the transaction," the spokesman said.
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"This is a decision that will be made by the Department of Justice and the FCC under applicable law and after a full and fair examination of the facts. We continue to believe those reviews will result in approval of this transaction."
Kohl’s GOP counterpart on the antitrust panel, Sen. Mike Lee, R-Utah, was less critical. He said the merger could free up capacity and "facilitate expansion of a 4G LTE nationwide network".
AT&T contends that competition will remain vigorous in the wireless industry even after the transaction.
It says that the merger will allow the companies to offer advanced wireless services to almost all Americans. That pledge has helped AT&T make inroads with lawmakers in both parties as it seeks approval of the deal. A group of 76 Democrats wrote to regulators in June saying that the merger may be beneficial to the spread of broadband access.
The letter from Kohl has been anticipated for weeks and helps set the tone for how Democrats in Congress will view the deal.
Earlier Wednesday, top Democrats in the House also expressed caution about the deal, saying that it could discourage investment and restrict innovation.
"We believe that AT&T's acquisition of T-Mobile would be a troubling backward step in federal public policy--a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace," House Energy and Commerce Communications and Technology Subcommittee Chairwoman Anna Eshoo, D-Calif., Rep. Edward Markey, D-Mass., and House Judiciary ranking member John Conyers, D-Mich., wrote in their letter to FCC and the Justice Department.
"Such industry consolidation could reduce competition and increase consumer costs at a time our country can least afford it."
This article appears in the July 20, 2011 edition of National Journal Daily PM Update.