By Marcus Leach

The proposed merger of AT&T and T-Mobile USA looks set to collapse after the US government stepped in to sue and block the $39 billion deal.

In March of this year a deal had been struck that would have seen AT&T buy Deutsche Telekom, and in the process create the largest US wireless network.

However, according to the Justice Department the merger would violate US anti-trust law, and they have thus requested a court order to stop it going ahead.

"We are surprised and disappointed by today’s action, particularly since we have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated," a statement on the AT&T website said.

"We plan to ask for an expedited hearing so the enormous benefits of this merger can be fully reviewed. The DOJ has the burden of proving alleged anti-competitive affects and we intend to vigorously contest this matter in court.

Had the deal gone through, and if it does indeed go through in the future, it will give AT&T close to 43% of the mobile phone market in the US.

But for any deal to go through it will need the approval of both the Justice Department and the Federal Communications Commission (FCC).

"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," said Deputy Attorney General James Cole.

"Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation's wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition."

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