The US Justice Department has filed to block AT&T's proposed $39 billion acquisition of wireless rival T-Mobile USA because of anti-competitive concerns.
The Justice Department said the acquisition would "remove a significant competitive force", as AT&T and T-Mobile compete in at least 97 of the top 100 US wireless markets, according to court papers obtained by Reuters.
AT&T shares plunged more than 4% after the Justice Department announced it had filed suit to block the takeover.
Shares of AT&T's rival Sprint, which is expected to benefit if the T-Mobile deal is blocked, jumped 7.8%.
The deal falling through would cost AT&T, which promised to pay a cash breakup fee of $3 billion on top of giving spectrum to T-Mobile USA, a unit of Deutsche Telekom AG.
AT&T has said the deal would let it add capacity and meet demand for high-speed wireless service.
Rivals such as Sprint said it would hurt competition and lead to higher prices, an argument echoed by the Justice Department in the court papers.
The Federal Communications Commission has not made a decision to block the deal, a spokesman said. AT&T declined to comment.
