You heard right. Bloomberg is reporting that the United States government (!) just filed court papers in Washington, D.C. to block the much ballyhooed tie-up between AT&T and T-Mobile USA. Oddly enough, T-Mobile and AT&T promised this morning that a total of 5,000 jobs would be hand delivered to the US if the two telcos were allowed to become one, but it’ll take a heck of a lot more convincing now. For what it’s worth, this doesn’t mean that the deal is or isn’t happening — it’s just another step in the process — but it most certainly doesn’t bode well for proponents. Nor for AT&T’s share price.

According to the report, the Justice Department feels that the deal would “substantially lessen competition” in the wireless space. In fact, it boldly stated the following: “AT&T’s elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market.” If things end up falling apart, it’s important to remember that AT&T would be forced to pay Deutsche Telekom $3 billion as a break-up fee, which ought to make Tiger Woods’ misfortunes look like an outright bargain.

Update: Full press release is now embedded after the break, and meanwhile, Federal Communications Commission Chairman Julius Genachowski has issued the following public statement: “Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition.”

Update 2: Wayne Watts, AT&T Senior Executive Vice President and General Counsel, issued the following statement (seen after the break)…

[Thanks to everyone who sent this in]

Continue reading US government files to block proposed AT&T / T-Mobile merger (update: AT&T and Sprint respond!)

US government files to block proposed AT&T / T-Mobile merger (update: AT&T and Sprint respond!) originally appeared on Engadget on Wed, 31 Aug 2011 10:36:00 EDT. Please see our terms for use of feeds.

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