The U.S. Justice Department said Verizon Wireless could buy and sell spectrum rights, but other parts of a deal with cable companies were anti-competitive.
In December 2011, Verizon agreed to buy an unused portion of the wireless spectrum from a consortium of cable companies. In June 2012, the company agreed to sell a significant portion of that to T-Mobile USA, the country's smallest national mobile wireless companies.
The Justice Department liked that part of the deal that involves four of the nation's largest cable companies.
In a statement, the department called the unused portion of the spectrum "an important national resource." Healthy competition among businesses would increase and benefit the public, the department said.
However, the department said "Verizon and the cable companies are direct competitors in many local markets ... where Verizon offers video, voice and broadband service," which meant parts of the deal in which Verizon agreed to sell the cable company services would interfere with competition.
A "series of commercial agreements between Verizon and the cable companies would have threatened this competition," the department said in a statement.
The department said the deals included agreements for Verizon to sell cable company services "on an equivalent basis," with Verizon's FiOS -- fiber optic system -- where FiOS is available.
This would cut into the "ability and incentive (for Verizon) to sell its own services aggressively," which would hurt consumers, the department said.
The department said it had filed a lawsuit to prevent the deals from proceeding as is.
The cable companies involved include Comcast Corp., which has about 22 million video subscribers more than 17.5 million broadband subscribers, Time Warner Cable Inc., which has more than 12 million video subscribers and more than 10.5 million broadband subscribers, Bright House Networks, the 10th largest provider of video programming distribution, and Cox Communications Inc., the country's fifth largest video programming distributor.