Shares of Sprint Corp. S, -5.34% dropped 5.2% and T-Mobile U.S. Inc. TMUS, -1.51% shed 1.4% in midday trade Tuesday, after a multi-state lawsuit by State Attorneys General was filed to block the telecom companies’ proposed merger. The suit was filed in New York by New York Attorney General Letitia James and California Attorney General Xavier Becerra, in coordination with attorneys general from Colorado, the District of Columbia, Maryland, Michigan, Mississippi, Nevada, Virginia and Wisconsin, alleging that a merger of two of the four largest mobile network operators would “deprive consumers of the benefits of competition and drive up prices for cellphone services.” The $26 billion merger deal has been under scrutiny since it was announced more than a year ago. “When it comes to corporate power, bigger isn’t always better,” James said. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. Sprint’s stock has rallied 26% over the past 12 months and T-Mobile shares have run up 30%, while the S&P 500 SPX, -0.23% has gained 3.7%.