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7 states join effort to block AT&T merger

Seven states have joined a Justice Department antitrust lawsuit seeking to block AT&T Inc.'s proposed $39 billion acquisition of rival T-Mobile USA, officials said Friday.

The move strengthens the federal case against the proposed merger, setting up another hurdle to completion of the deal.

"We are pleased that these states have joined the department in its lawsuit," the department said in a statement. "Together, we will seek to protect consumers from the anti-competitive harm that would result from this proposed transaction."

The states involved are New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania.

AT&T announced the planned acquisition of T-Mobile USA from Germany's Deutsche Telekom AG in March. The deal would make AT&T the largest U.S. cell phone provider with 129 million subscribers, well ahead of Verizon's 102 million.

But in August the Justice Department sued to block the deal, with one official saying it would result in "higher prices, fewer choices and lower quality products for mobile wireless services."

In an amended complaint, the Justice Department said the merger would give the combined company a market share of more than 40 percent in more than half the nation's biggest metro markets. In at least 15 metro areas, the enlarged AT&T would have more than a 50 percent market share, including the markets of Dallas, Houston, Oklahoma City, Birmingham, Honolulu and Seattle.

New York Attorney General Eric Schneiderman, in a statement announcing he was joining the lawsuit, said the merger would open the door to "a near duopoly shared by the merged firm and Verizon."

AT&T has defended the deal, saying the merger would result in "increased output, higher quality service, fewer dropped calls and lower prices to consumers than without the merger." But experts say a trial would be time-consuming, and the outcome uncertain.

AT&T shares were up slightly in late trading Friday, while Deutsche Telekom American shares were down.