The U.S. Justice Department announced Wednesday it would seek to block AT&T's $39 billion takeover of T-Mobile, saying it would be anti-competitive.
The DOJ asked the court for a declaration that the takeover would violate U.S. antitrust law because it would "substantially lessen competition" in the U.S. wireless market.
"The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services," Deputy Attorney General James M. Cole said in a statement.
"T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network," Acting Assistant Attorney General Sharis A. Pozen added. "Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer."
"Any way you look at this transaction it is anti-competitive."
AT&T's proposed takeover of T-Mobile, the U.S. unit of Germany's Deutsche Telekom, had come in for criticism from some members of Congress and others on the grounds it would harm competition.
Verizon currently holds a 31-percent share of the U.S. wireless subscriber market followed by AT&T with 27 percent.
Adding T-Mobile's 37.3 million customers would give AT&T a 39-percent market share, putting it ahead of Verizon and Sprint Nextel, which had also expressed interest in acquiring T-Mobile.
AT&T shares fell as much as five percent on the news Wednesday.
Update (12:15 p.m. ET): Federal Communications Commission Chairman has also issued a statement in response to the suit.
"Competition is an essential component of the FCC's statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition," he said.
"Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices."
-- with AFP